Nothing is easy with this stock market. Get used to it folks. You’re likely looking at months, if not years, of a tough market. It’s been tough for a lot of years, and that’s likely to continue for quite some time to come simply because the economy in the United States is not in the best of shape. Deflation seems to be the word of the day. Word of the year for that matter, and probably the word you’ll hear for years to come. Each and every economic report seems to be signaling a slow down in just about every facet of our economy. Boring and old already, but no end in sight, unfortunately. The back drop of bad economic news is fighting toe to toe with good earnings for this particular quarter, and too much bearish sentiment. A good fight, for sure, with each side having ammunition to claim victory. Of course, longer-term, it’s all about the economy and nothing will help this market bigger picture if that doesn’t turn around soon.
Time is definitely running out for these companies to repeat the same earnings numbers from this quarter in the next quarter, let alone future quarter earnings. The numbers will be coming down in a big way, and fast, if we don’t get better figures coming in. The only way that may be able to happen is if we get additional stimulus in the months to come. If we do, that’ll only delay the inevitable down the road. Tough decisions likely ahead for our leaders. I don’t envy them, to be sure. Bottom line is, if you’re going to be a player of this market, I wouldn’t get aggressive beyond what’s appropriate for such conditions. Be smart. I don’t think longer-term is going to work unless things turn economically, thus, be prepared for lots of whipsaw short-term, and danger signs longer-term. I do think we’re fine for the very short-term, but beyond that, I wouldn’t count on it as things stand today.
We started the day with a small move higher, but that didn’t last very long at all. Once the 60-minute charts unwound back up a bit, the sellers came rushing in hard. The Nasdaq went from up about 15 to down 32 or so intraday, nearly a 50 point reversal. Not pretty. Once the RSI’s got to, or near 30 on those 60-minute charts, it was rally time. We also got to support at the same time we hit those 30 RSI’s as we hit the 50-day exponential moving average on the S&P 500 at 1093. This is just where the S&P 500 was when we got oversold, and thus, it was rally time. Quite a rally it was as well. The Nasdaq went green by a few points only to give it up late, as often happens in these types of choppy markets. We closed well off the lows, but also decently off the highs. At least the bulls can feel good about holding and rallying at S&P 500 1093.
If the S&P 500 was to lost 1093, it would be facing its final line in the sand of support at 1080, or the longer-term down trend line. If that trend line gets lost with some force, it’s free fall time for this market. It was necessary for the bulls to hold things at 1093, or the 50-day exponential moving average, because they were able to do so with some power behind it showing that there are enough buyers around to prop up this market when it’s crunch time for the bulls. Nothing to get excited about, but at least they have what it takes for now to hold the fort. On the up side, 1131 S&P 500, or the last strong high we fell from, is the wall of resistance that will NOT be easy to get through. If we can get through there, we can see 1175 or thereabouts, but again, 1131 is a very tough wall that will only get exceeded if we can start getting some better economic reports.
Look folks, the United States is dealing with deflationary times. The fed knows it and that’s why he has no intention of raising interest rates any time soon. It could be years before we get our first rise in interest rates from Mr. Bernanke. Earlier this year I spoke of these deflationary issues, and why he wouldn’t raise rates. His latest statements tell the tale as he spoke about no real recovery for five to six years. We are dealing with very rough times in this country. Things aren’t very good from a variety of issues we’d all rather not be dealing with, but likely will be doing so for many years to come. The housing bubble isn’t coming back any time soon. The headaches on the books of these large banks isn’t going away any time soon, either. There just isn’t much to celebrate, unfortunately. We take this market day to day and hope we see things improve economically, but so far that has been a no go.
Day to day folks. Long bias for now. Won’t be forever.
Peace,
Jack
Apple Inc. (AAPL) still seems to be struggling in this market, down another 2.85 today after losing 3.12 yesterday. On the other hand, Goldman Sachs (GS) was up 5.38.
