Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
<<
He notes that the Federal Reserve has engineered 12 interest rate cuts and still the market has not responded. In practically every other instance when the Fed cut rates since 1921, stocks rebounded.>>
So he is saying that we are going to have a depression because the market has not rebounded and yet he is also saying that we are going to have a depression because the stock market is overvalued. Which one is it.
fair take
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...
TOMI KILGORE'S MARKET MAP
Bulls are still alive; are they stronger?
Commentary: Caution at a crossroads is a good thing
By Tomi Kilgore, CBS.MarketWatch.com
Last Update: 12:01 AM ET Jan. 20, 2003
NEW YORK (CBS.MW) -- I've always been told that what didn't kill me would make me stronger. It never made me feel better during the bad times, but I understood what it meant once things got better.
Free! Sign up here to receive our SiteWatcher e-Newsletter!
INFORMATION FOR :
Create an alert for
Add to my portfolio
More cool charts on
Discuss
NEWS FOR
More news for
Quote & News Charts Financials Analysts Options SEC Filings
TRACK THESE TOPICS
My Portfolio Alerts
Index: S&P 500 Index Add
Create
Column: Tomi Kilgore's Market Map
Create
Get Breaking News sent directly to your inbox
Create A Portfolio / Create An Alert
Despite all the negativity last week and through most of December, the stock market's technical condition is still flashing green.
"The market's technical condition is constructive, and the S&P 500 is set up to gain on good news," said John Schlitz, chief technical strategist at Instinet Research. "But it's just not getting it -- the set-up itself won't do it."
Recent consolidation has once again brought the market to a crossroads. Instead of green, this time bulls are seeing yellow.
Be it apprehension from the latest rally's unfinished business or fear itself, the bulls are no longer willing to bet on the hope that something good will happen. They have been painfully reminded that losses are much worse than missing out on potential profits.
That's not a bad thing.
The benefit of experience most likely kept bulls from committing too much to the October rally, which in turn kept them fresh enough to keep the December pullback within bullish boundaries.
What hasn't killed them may have made them stronger.
Good to go
The December decline felt like the worst of times, especially since many were anticipating a seasonal rally. But as bad as it was, Schlitz feels the historic rally off the October lows is still alive, given the pullback had failed to retrace even half the move up.
Technicians are very keen on assessing retracements because it helps them put reversals in perspective without being clouded by the negative sentiment. It also helps understand the strength of the initial move.
Many use retracement levels based on the Fibonacci ratios of 0.382, 0.50 and 0.618 as a guide. The idea is that as long as a pullback (or bounce) stays within 61.8 percent, the original move is intact.
The S&P 500's ($SPX: news, chart, profile) decline to the Dec. 31 intraday low of 869.45 gave back just 46 percent of the gains off the Oct. 10 low of 768.63 to the Dec. 2 high of 954.28.
Steve Nison, president of Candlecharts.com, added that the bounce off the Dec. 31 low confirmed "really good support" for the index, since it coincided with the lows of Oct. 29 (867.91) and Nov. 13 (872.05). The market's disdain for that level suggests bulls are lurking, and may keep bears from attempting another foray.
Constructive consolidation
Just as recent moves should be put into perspective, positive technical signals need to be put into context. It's not enough to be good -- 'where' is important, too.
In the S&P 500's case, support has kept the index hemmed in a trading range for the last few months. Schlitz sees this as constructive, given that the consolidation is occurring at the high end of the October rally's range. If the consolidation were much lower, bulls would have farther to travel before breaking into new ground.
Schlitz pointed out that new ground is fairly close, even after the 30-point sell-off over the past three sessions to 902. The 200-day simple moving average, which many use as a bull-versus-bear barometer, came in around 940 on Friday. A move above that level would surely draw in buyers, at least enough to successfully attack the Dec. 2 high of 954.28.
(See interactive java chart. Change "# of Days" to 200.)
The S&P came within 10 points of that line in intraday trading on Dec. 13, before backing off.
Good support is nice to have, but it won't take out resistance. So what's keeping the bulls from stepping on the gas?
Seeing yellow
Restraining the index at the moment, said Nison, the godfather of Western candlestick charting theory, are two short-term bearish patterns.
The first is a "doji" -- Japanese for "at the same time" -- that appeared on Jan. 10, just one day before the index topped out. On that day, the index opened (927.58) and closed (927.57) at virtually the same rate, suggesting supply and demand had reached equilibrium.
(See java chart. Go to "Price" and select "candlestick.")
The other is a "bearish engulfing" that reared up on Jan. 15. The index opened at 932.17 and closed at 918.22, enveloping the spread between the previous day's open and close (926.15 and 931.66).
This suggests that bears withstood all the bulls had to give them, and came back even stronger.
Nison, the godfather of Western candlestick charting theory, feels these signals suggest the S&P will now go back to test the bottom of the recent range at around 870. While there should be "good" support there, too many tests can spoil its effect. Bulls may get tired of defending a level, since it means they are not making money, and bears will become less fearful of something they've become familiar with.
Nison reminded, however, that all of these signs are short term in nature. In the long-term charts, the readings still carry a negative bias. Well, at least not a positive one.
Many technicians hailed the October low, given that it roughly matched the one hit on July 24 (775.96), as a "double bottom" reversal pattern (see previous column).
But two lows aren't technically a "double bottom" until the crest in between them is surpassed. In this case, it is the Aug. 22 high of 964.84. And the Dec. 2 high fell about 10 1/2 points shy.
Playing it smart
"The market is in a 'wait-and-see' mode," Schlitz said. "Why buy now and risk the downside? It's better to play it smart and wait for the break out."
Perhaps the market has finally unlearned what got them into trouble three years ago -- it's OK to be hopeful and exuberant about the future, but within rational bounds. Prepare for the best, but keep an eye out for the worst-case scenario.
The light may look green, but it can quickly turn to red. So no matter how clear a crossroads in the market appears, slowdown -- you may need to change direction very quickly.
This way of driving may not get you where you want to go as fast as you'd like, but it will keep you on the right path. And it will keep you strong and intact when you get there.
Tomi Kilgore is a reporter for CBS.MarketWatch.com in New York.
More TOMI KILGORE'S MARKET MAP
•Dow sticks to its resolution as October rally thrives 12:05am ET 01/13/03
•Is GE's bullish 'doji' a prelude for the market? 12:01am ET 01/06/03
•Amazon's fall is still profit-taking, not a prediction 12:05am ET 12/30/02
•Bulls should still be happy with what they've gotten 12:37am ET 12/23/02
•Stocks will not be insulated from a dollar fall 1:59am ET 12/16/02
Latest Industry News Get Alerted on News in this Industry
•Finding the right villa for summer vacations 12:19am ET 01/22/03
•Finding timing-friendly mutual funds 12:03am ET 01/22/03
•Contrary to popular belief? 12:02am ET 01/22/03
•Where the jobs are this year 12:01am ET 01/22/03
•Municipal leaders propose economic plan 10:48pm ET 01/21/03
NEW! Get the Before the Bell e-Newsletter
Want a to get a briefing of the market before it opens each day? Now you can with the FREE Before the Bell e-Newsletter. Subscribers will get a comprehensive, pre-market look at all the stocks expected to move each day, plus all the early news and action in Europe and Asia. Sign up for the Before the Bell e-Newsletters today!
Trading Center
Trade Here!
TradeHere!
TradeHere!
TradeHere!
Front Page / Message Boards / Mobile / MarketPlace / Free Membership
Feedback / Letters to the Editor / Site Index / Company Info / Jobs / Advertising Media Kit / Licensing
Make CBS.MarketWatch.com your Home Page
MarketWatch.com is traded on the Nasdaq stock exchange under the symbol MKTW.
Partner Sites
CBSNews.com / CBS.com / FT.com / BigCharts.com
© 1997-2003 MarketWatch.com, Inc. All rights reserved. Disclaimer. See our Privacy Policy - updated 6/25/02.
CBS and the CBS "eye device" are registered trademarks of CBS Broadcasting, Inc.
Intraday data provided by S&P Comstock and subject to terms of use.
Historical and current end-of-day data provided by FT Interactive Data.
Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges.
SEHK intraday data is provided by S&P Comstock and is at least 60-minutes delayed.
All quotes are in local exchange time.
Good news, I think it's by design.
are there enough bears for a major move up yet, we'll see. there may be a surge comming to a screen near you. just guessing.
can this be a repeat of the last call of a retreat to the 1200's that instead saw the nasdaq go to 1500+?
then I am safe long
Reuters
After the Bell: Stocks Surge on Forecasts
Monday January 6, 5:03 pm ET
NEW YORK (Reuters) - Stocks rose in after-hours trading on Monday, building on the session's gains as investors eyed an upbeat batch of news on sales and earnings from companies like EMC Corp. (NYSE:EMC - News) and Mercury Interactive Corp. (NasdaqNM:MERQ - News)
ADVERTISEMENT
Data storage company EMC surged to $7.62 from $6.80 at Monday's close after it said it would post a loss in the fourth quarter but said customer spending was better than expected and that its revenue will meet expectations.
Mercury Interactive, a maker of products for software testing and monitoring, surged after it said its quarterly results would beat its previous expectations. It rose to $34.85 from $33.08 at the close.
Guitar Center Inc.(NasdaqNM:GTRC - News) climbed to $18.52 from $16.86 at the close after the nation's largest guitar retailer boosted its earnings outlook for the fourth quarter.
Software maker Kronos Inc.(NasdaqNM:KRON - News) climbed to $41.43 from $40.70 at Monday's close after it said it expects first-quarter revenue and profit to land at the high-end of the projections it offered in October.
The Nasdaq's After Hours Indicator was up 0.3 percent.
how can new highs reach $85 ?
so, what is the point?
excellent point. the market would crush if most people would not hold at the end of day.
oh oh, now we'll have santa's rally, I'm in.
BTW, what about that qcom eh, it's making me some serious money. anybody else experiencing the same thing? It looks like we are going to party like is 1999.
Let's fiesta then. g
To da moon,...
Now let me add to my last post that a novice can lose a lot of money if he uses what seems to be common sense. He might think, if they were flying when they were losing a lot of money, now that they are making a lot of money and the predictions are that they will make even more, then they are going up even more. So I am going to buy here and make a lot of money. And then he sees them going down and down. But he waits because the valuations are so low and the earning predictions are so good. Then guess what can happen? Yes that's right the companies start warning and losing money and bang! they really crash and he is now broke.
If you take a careful look during the last semis downturn, they rose very fast to extreme valuations when there was not a sign of an upturn. And when the upturn came they crashed just as they were making lots of money and the companies were still not predicting a downturn.
I remember all of that because I was envious not participating in the price surge because I wasn't seeing any signs of an upturn and I did not have any previous experience on how this shit works.
It is just not obvious to most people. I guess that is the way it is supposed to be. But then again, who knows how it is going to play out this time. I just think that history is a just a guide to make a guess.
The news is that Sadam threats are not serious. I think that Sadam is just blowing up sand.g
up up up and away.eom
Hed honcho is really going to miss out by trying to time this new bull market. I can't believe being 100% invested at the bottom and then selling at the first move up, missing the bulll.
ok, so what does it mean?
Even sadder than all that is the fact that some people in the US seem to feast on all that doom and gloom looking to profit from it. They are like scavengers roaming around looking for carcasses to devour.
UP up and away, the more you wait, the higher it goes. It has the same pattern of last October. The only difference is that last October it was more of just a technical rally. This time the economy has a good chance of coming back. Companies may start to invest and to hire people preparing for an economic upturn. I have been hearing that democrats are calling for economic stimulus legislation like tax cuts, no capital gain tax. Everything is coming together, the technicals are predicting that economic and earning numbers(example csco) will be fairly good. Every time a good number is reported I believe a surge will ensue. We might be looking at nasdaq 2000 by January 03, New 52 week highs for MSFT, INTC, etc.
Last but not least. This is just my opinion.