Browse Articles by :
Technical Analysis : Week 49/09
November 30, 2009
The S&P500 Index closed at 1091 last week. This indicates a gain of 0.1 points from the previous week’s close.
The market had started the week positively from the help of the better than expected economic data. However, the market gives back all the gain on the short trading day of Friday, as the U.S. market playing catch up following the news from Dubai.
Technically, S&P500 Index had managed to stay above the 20 days moving average and 1075 level convincingly, indicated that the bullish momentum is still very strong. However, S&P500 Index fail to establish itself above the 1100 level for 3 consecutive weeks, will cap the movement of the bull. This week the market will likely to test 1100 level again, with the objective of establishing itself above the psychological level of 1100. The catalyst might just be the holiday season sales.
The market seems to have recover very fast after the shocking news from Dubai. The market’s action says a lot on the high level of the street’s optimism and confidence. It seems that the bullishness in the market will not be shaken by anything till the end of the year.
Looking at weekly candles, the S&P500 Index is suggesting a pause. The weekly candle shows a shooting star that indicates a reversal or pause in the coming week. The psychological level 1100 will likely to act as a very strong resistant for the market.
Looking at daily candles, we have a huge red candle off its low, signaling that the S&P500 Index looks like it might be starting the week slightly to the downside. The market will likely to be flat.
The immediate support levels are S1: 1075, S2: 1050 and S3: 1025.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.
In conclusion, the market this coming week is likely to be very volatile, as the market will be looking at the Non-Farm Payroll, Holiday Season Sales and the development of Dubai. The market will not be looking good especially when the weekly candles shows 2 consecutive shooting stars. This coming Monday will be the key day for the market as traders and investors will be coming back to assess the situation in Dubai and Black Friday Sales. So stay cool and trade carefully.
Sector Rotation : Week 49/09
November 30, 2009
Last week, Health Care (0.39%) is the only sector in green as the streets lighten the other sector and pile some money into the defensive sector. Financial (-3.58%) is the biggest loser followed by Industrials (-1.93%), Technology (-1.63%), Materials (-1.28%), Consumer Discretionary (-1.11%), Consumer Staples (-0.88%), Energy (-0.54%) and Utilities (-0.37%).
There are so many uncertainties in the market nowadays such as Sovereign credit default, Santa Claus Rally, the fast falling Dollar, high Unemployment Rate and many more. Any disappointing news from the event will cause the market to panic. This is because the market had been rising for the past few months without a serious correction.
In conclusion, the best sector going forward to the end of the year will be holding cash. It will be better to have profit in the pocket to celebrate the year-end than anxiously praying that the market will survive in uncertainties.
Market Analysis : Week 49/09
November 30, 2009
The stock market experiences another rollercoaster ride for the week. The market had celebrated the resounding good news from the Existing and New Home Sales, improving CB Consumer Confidence and the less than 500K Unemployment Claims for the first time since the credit crisis. However the market got spook by the news from Dubai on late Wednesday night, which stated that Dubai would delay repayments on $60 billion of debt from its investment company, Dubai World. The decision raised broader questions about the safety of emerging market debt and strength of the global recovery.
The news spread quickly on late Wednesday and it cause wide selling off the next day when the market open in Asia and Europe. Investors and traders were seen selling first before questioning and find out the impact of the news. The action causes huge volatility in the equity, commodities and currency market. The U.S. market was spared on Thursday as it closed for Thanksgiving Day.
On Friday, the U.S. market opened heavily in the red falling more than 3%. However, the fear in the market did not last very long as the bargain hunters came in quickly during the short trading day. The market manages to erase the earlier losses to close at less than 1.5%.
The bargain hunters think that the market had overreacted itself on Thursday as they scoop up the cheap stocks on Friday. Many of them also believe that the oil-rich Abu Dhabi will save Dubai from defaulting the loan.
Also on Friday, the market was watching at the result of the retail stores’ sales. According to the National Retail Federation said on Sunday, there was more Americans hit the stores during Black Friday and the rest of the holiday-shopping weekend, but they spent lesser than a year ago.
Major Events
- Dubai delay repayments on $60 billion of debts from its investment company, Dubai World.
- Proposed reforms for Fed could hurt U.S., said Bernanke.
Economic Data
Investors and traders will be looking at the most important piece of economic data in the coming week, November, Non-Farm Payroll. Economists surveyed by MarketWatch expect a 23rd consecutive month of job losses, with nonfarm payrolls forecast to fall by 100,000 after a 190,000 decline in October. The unemployment rate would likely to remain at a 26-year high of 10.2% or above.
Manufacturing data will also be on the tap in the coming week. Starting with ISM manufacturing report, Construction spending and Total Vehicles Sales on Tuesday. On Thursday, ISM Non-Manufacturing report and Nonfarm Productivity will be released. Factory Orders will be due on Friday.
Others important economic data such as Chicago PMI, Pending Home Sales, ADP Non-Farm Employment Change and Fed Beige Book will be out in the coming week.
Fed Chairman Bernanke will be testifies on Thursday.
Summary
The implication of the Dubai news may have a greater effect on the market in the coming weeks. Investors and traders may start to be a little more risk averse in the emerging markets. Dubai’s announcement could also be seen as a sign of bubbles yet to burst, because Greece, Latvia and Hungary, all had the same problems, which are until now, limited the fallout by the central banks.
Investors and traders will be looking at the result of the retail sales in starting from Black Friday. The health of the consumer spending will set tone for the market to the end of the year.
In the coming week, the streets will have to ponder about the impact of the Dubai effect and the result of the holiday season sales. The market seems to be quite resilient even after the shock from the Dubai news. Last week, the market’s action had easily translated into the bullish tone in the street. This is because the market had seemed shaken the negative news easily as greed-overrun fear ever since the march low.
In conclusion, the market will likely to go higher as long as the Fed continues to favor the cheap credit and refuse to tighten the monetary policy. The news in Dubai will likely to unsettle some investors but it is unlikely to bring down this market. However, if others countries start to delay or default payment in the coming weeks, it will have massive impact to the market in the world. Therefore, it would be wise to trade extremely careful as uncertainty in the market spell doom easily.
From,
Lawrence
Foreword Week 49/09
November 30, 2009
Last week the scary news of the Dubai World going to default their loans had sent the market in the world in a tailspin. The Dow Jones Industrial Average lost 9 points to close at 10,309 (0.1%), snapping a three-week winning streak followed by the S&P500 Index gained 0.1 points to close at 1091 and the Nasdaq Composite lost 8 points to close at 2138 (0.3%).
Technical Analysis : Week 47/09
November 16, 2009
The S&P 500 Index closed at 1093 last week. This indicated a gain of 24 points (2.4%) from the previous week’s close.
The market had to thanks the Dollar for another great run for the week. The dollar weakens on Monday after the negative comments from the official. Traders and investors gladly took it on stride as it bid the market furiously on Monday.
The market continues to ignore the bad economic data such as consumer sentiment and IBD/TIPP Economic Optimism. The market look set to close higher for the year of 2009.
Technically, S&P 500 Index had blast through the 20 moving average and the 1075 level convincingly, indicated that the bullish momentum is still very strong. However, S&P 500 Index fail to establish itself above the 1100 level, will cap the movement of the bull. This week the market will likely to test 1100 level again, with the objective of establishing itself above the psychological level of 1100. Looking at the chart, S&P 500 Index failed to close above the red color trend line on Friday, might indicate that the bull have exhausted from the great run off the March low.
The street’s optimism and confidence in the market remain high after the officials stated that the Dollar is still slightly overvalued in the world. Throughout the week, most of the articles have pointed a weaker dollar for the next couple of months.
Looking at weekly candles, the S&P 500 Index is suggesting a pause. The weekly candle shows an ugly shooting star that indicates a reversal or pause in the coming week. The psychological level 1100 will likely to act as a strong resistant for the market.
Looking at daily candles, we also have an ugly shooting star candle signaling that the S&P 500 Index looks like it might be starting the week slightly to the downside. The market will likely to be flat.
The immediate support levels are S1: 1075, S2: 1050 and S3: 1025.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.
In conclusion, the market this coming week is likely to be very volatile as there are many economic data that are schedule for releases. The market sentiment remain bullish and this likely means that the market will test the psychological level 1100. If the market able to establish itself above the psychological level in the coming week, it will be able to surge higher for the end of the year. The market will have to find support from the weak dollar as it propels itself higher in year 2009. Therefore, the weakness of the Dollar will be the key towards the bullishness of the market.
From,
Lawrence Chua
Sector Rotation : Week 47/09
November 16, 2009
Last week, Consumer Discretionary (1.08%) after several companies being upgraded by analysts. Materials (1.01%) took the second spot followed by Technology (0.74%), Health Care (0.44%), Consumer Staples (0.34%), Industrials (-0.22%), Utilities (-0.27%), Financials (-1.08%) and Energy (-1.55%).
Gold continue to be in the limelight. Gold seem to be unstoppable in recent weeks as it making new high for the year. Everybody seems to love gold recently as it is the best investment tool currently. Gold offer the protection of weak dollar, a defensive play by nature and also benefit from the commodities rally.
While many people are buying gold, I would like to point out that Gold trade might be overbought recently. Alternative to gold, silver is another option to be considered. So far, Silver had not been in the limelight and it is at a better buying price than gold. Thus, Silver seems to be the best alternative for Gold trading.
In conclusion, Silver will likely to benefit from the rise of the Gold.
Market Analysis : Week 47/09
November 16, 2009
Last Monday, IMF official hinted that the Dollar is not undervalued even when it had already drop 14% in this year. The market took the cue and spike on the Monday opening as traders capitalize on the weak dollars to scoop up more stocks. After the surge on Monday, the market hovers sideway for the rest of the week, as the earnings and economic news are light.
Consumer sentiment and the U.S. trade balance are the limelight for the week. Traders and investors are worried that the weak consumer sentiment will curb the spending on the holiday season with less than 40 days to go.
The Reuters/University of Michigan index of consumer sentiment fell to 66 in November, down from 70.6 in October. Analysts had been hoping to see the measure rise as high as 72 in the latest report. The negative numbers in the consumer sentiment will likely to weight on the market going ahead of the holiday season. In the coming holiday season, consumers will likely to buy only the quality and essential stuff for the celebration as some of the companies are still firing people in this week.
The U.S. trade balance widened more than expected in September, with import prices rising faster than export prices. The trade deficit widened to 36.5 billion in September, compared with expectations for an expansion to $32 billion, according to economists polled by MarketWatch. The Dollar suffered immediately after the release of the U.S. trade balance report. While the Dollar suffers losses, the rest of the markets such as equity, commodities and gold gained on the “Risk-On” trade.
Overall, the trading volumes in the market were below average throughout the week. The market basically went flat after the great start on Monday. Traders and investors were seen traded lightly as they are looking for the direction from the APEC meeting in Singapore later in the week.
Major Events
- Orion Bank closed as the federal deposit insurance fund take $1 billion hit.
- U.S. Trade balance widens more than 18%.
- Gold surge to a high of 1128 on Globex on Monday 16/11/09
Economic Data
There will be a glut of important economic data coming out in the coming week. The October U.S. Retail sales will be in the limelight and set the pace and sentiment for the week. Economist estimate a 1% seasonally adjusted increase in sales for October, a strong rebound after a 1.5% decline in September.
The street will be watching the inflation number from the Producer price index and the Consumer price index. The market will likely to feel the pressure from the Fed, if the data indicate a much stronger inflation reading.
Housing Start and Homebuilders’ index will shed more light in the process of the economy recovery. The October reports will be significant as the buyer and builders did not know that the Congress will extend the home-buyer tax credit past its Nov. 30 expiration and expanded it to repeat buyers.
Manufacturing data such as Industrial production, Capacity utilization and Philly Fed Index will be on the tap.
Lastly, the street will look at the weekly jobless claims and leading indicators to guide them for the rest of the year.
Earnings
The third-quarter earnings had finally come to an end in the coming week with the mildest profit decline in two years, easily topping low expectations, even as revenue growth is still out of reach.
80% of S&P 500 companies have beat analysts’ estimates for the third quarter, according to Thomson Reuters. Profits dropped about 14%, far better than in recent quarters.
While the street had an easy third quarter earnings expectation, the fourth quarter is likely to be a different story. This holiday season will hold the key for the fourth quarter earnings.
Summary
The streets had been watching on the leaders, especially from China at ongoing the APEC meeting in Singapore. The U.S. dollar and the Yuan issues had brought up at the meeting. One of the China official joint a renown Hong Kong businessman warn against the risk of the Asia asset bubble due to the ultra loose monetary policy in the United State of America.
The market will be watching closely on the economic data and looking for direction from the Fed Speeches in the coming week. However, the market will give number one priority to the U.S. Dollar, regardless of the economic data.
In conclusion, the market will likely to go higher as long as the Fed favor the cheap credit and refuse to tighten up the monetary policy. The market will continue to stay volatile in the coming week, as there are many economic data that are schedule to release. Furthermore, President Obama will likely to say something from his visit to the East.
Will we experience Santa Claus Rally in this year?
Foreword Week 47/09
November 16, 2009
Last week, the U.S. market headed off with a good start on Monday as the Dollar tumbled on the speeches of the IMF Official. The Dow Jones Industrial Average gained 247 points to close at 10,270 (2.5%) followed by the S&P 500 Index rose 24 points to close at 1093 (2.3%) and the Nasdaq Composite added 56 points to close at 2168 (2.6%) for the week.
Technical Analysis : Week 46/09
November 10, 2009
The S&P 500 Index closed at 1069 last week. This indicates a gain of 33 points (3.2%) from the previous week’s close.
The market had a great week with the support from the Fed Policy that ended up positive. 4 out of 5 days were trading in the green last week as investors and traders were glad to see that the cheap credits are still in place.
The market had completely overlooked the economic data such as the shocking jobless data. The market continues to look for good news as it swipes away the bad news.
Technically, it seems that the market is going to test the high in October. Currently, the 20 moving average and the 1075 resistant level are still containing the market. However, if the market breaks above the 1075 level, it will likely to test the 1100 level. Once again, if the market plays out the way it did in October, then we will likely to see the market hitting the 1125 level in the 3rd week of November.
The street’s optimism and confidence in the market grow strongly after the assurance from the Fed to keep the Fed Fund Rate at a record low level for an extended period.
Looking at weekly candles, the S&P 500 Index is suggesting an upside movement if it can break above the 1075 level. The weekly candle shows bullish harami candle formations that indicate a bullish week ahead.
Looking at daily candles, we have an ugly spinning top candle signaling that the S&P 500 Index looks like it might be starting the week either slightly to the upside or downside. The market will likely to be flat.
The immediate support levels are S1: 1050, S2: 1025 and S3: 1000.
The immediate resistance levels are R1: 1075, R2: 1100 and R3: 1125.
In conclusion, the market this coming week is likely to be bullish if it breaks above the 1075 level. If the market fails to break above the 1075 level, it will likely to revisit the 1025 level. The market will likely to take the cue from the Dollar Index as the economic and earnings are light in the coming week. Therefore, the weakness of the Dollar will spur the “Risk On” trade in the market.
From,
Lawrence Chua
Sector Rotation : Week 46/09
November 10, 2009
Last week, Industrials (5.08%) was the big winner followed by Consumer Discretionary (3.77%), Materials (3.68%), Health Care (3.44%), Energy (2.66%), Technology (2.51%), Utilities (2.05%), Financials (0.99%) and Consumer Staples (0.46%).
Gold is currently the hottest industry in the market. Gold prices had been surging for weeks. Everybody including the central banker want to have a piece of the yellow metal had make Gold the best investment for the past few months. Many of them buy Gold to hedge against the Dollar and also to protect against any meltdown in the stock market. However, there is a bunch of professional warning against the risk of buying Gold at such a historical high prices due to recent speculation.
In conclusion, the market will remain clueless as it searches for leadership among the sectors.
