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DOW + 117 on 1000 net advances
NASDAQ COMP. + 14 on 500 net advances
SHORT TERM TREND Bullish
INTERMEDIATE TERM TREND Bullish
The Dow began the day down over 100 points, but the bottom was reached within the first 5 minutes. This was in spite of mainly bad news. The comeback was impressive and further suggests that some sort of trading bottom has been seen.
Here's an interesting statistic. Financial stocks in general are 22% below their 200 day moving average. This has only happened 4 times since 1980 and in each case, the group was higher 30 days later.
Ben Bernanke talked today and one of his lines made me laugh out loud. He said that in the months and years ahead, there would be a lot of discussion about what went wrong with the credit markets and what not to do in the future.
Earth to Bernanke. All you had to do was check with me or any citizen of Main Street with a modicum of common sense. We would have told you that negative amortization loans are not a good idea. How about loans without documentation of income or ability to pay? Gee! This is why I have held for years that the great majority of wisdom resides on Main Street, not Wall Street.
Main Street also doesn't think it's a good idea to ship jobs, know how and capital overseas, but 99% the elites of Wall Street and academia think it's an excellent idea.
Now that I have that off my chest, let's talk a little about gold. The yellow metal made an all time high today and it looks to be going higher. It did a sideways consolidation for about 6 weeks and then moved up. There are no guarantees, but measured move theory suggests that we may be only half way through the current upmove.
Bonds and crude oil got whacked. We're moving to a sell signal on both. Incidentally, Timer Digest rates us number one in bond timing for the year 2007.
NEWS AND FUNDAMENTALS:
Moody's cut the credit rating of Freddie Mac. Capital One guided lower and December same store sales were lower than expected. Initial claims came in at 322,000 lower than the expected 340,000. Wholesale inventories rose 0.6%, more than the consensus 0.4%. On Friday we get the trade balance.
BOTTOM LINE: Our intermediate term systems are on a buy signal. Mutual fund investors and investors in the S&P 500 ETF symbol SPY are 100% long. The SPY was bought at 146.62.
Short term ETF traders are still in cash. We didn't meet the breadth requirements to go long on Thursday. Too bad, but at the appointed hour, there were six hundred net declining issues. On Friday let's buy a one half position of the emerging market's ETF, symbol EEM and a one half position of the S&P 500 ETF, symbol SPY at the opening. Place a stop at 144.00 on the EEM and at 137 on the SPY.
OTHER MARKETS
We are moving back to a sell on bonds as of today January 10.
We are on a buy for the dollar and a sell for Euro as of November 30.
We are on a buy for gold as of December 4.
We are moving back to a sell on crude oil as of today January 10.
We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.
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