Written by Rich B. Meier
TopEquityNews.com
The index charts aren’t feeling the season’s greetings or any of that good will to mankind stuff just yet. The NASDAQ, Dow and S&P 500 are all in the bottom straits of their trading channels.
In addition to residing in the lowermost half of recent chart real estate, the indexes all have declining MACD lines, and falling moving averages lining up bearish order: 50 day on top of the 26 which is on top of the 12 – not a pretty sight.
The technical picture runs contrary to recent developments in economic news. Last week, Jobless Claims were much better than expected, manufacturing more robust than anticipated, and retail sales gained; however, not as much as forecasted.
Overall, the economy has strung together a series of good news announcements. So why is Wall Street in a sour mood? The answer is simple, EUROPE. The Union is on the verge of recession and prognosticators are projecting doomsday scenarios. Traders see only a few grains of sand left in the upper chamber of the EU’s debt hour glass.
If only there was a shining red light to guide investors through the fog, a leading man to pull us through the stormy night. Top Equity News sees a potential hero on the index charts; one that can save the Santa Claus rally from the Grinch.
On Friday, stocks managed to gain ground on a tower of volume. Maybe, just maybe, it is the shining star in the night that points to gains to come. If bulls take flight early in the week, the X-mas rally could be on.
A plus day on Monday would put all of TEN’s momentum indicators in go territory, which could attract the attention of short-term trading models. The computer programs print a few buy tickets, and Top Equity feels there is room to put a 3% rally on the board just in time for Christmas delivery. That’s certainly what we hope to find under the tree.
However, should the rails come off the sleigh, then bah-humbug we are Scrooged. I hate the holidays. The indexes fall off the roof to the next level of support at 2475-2450 on the NASDAQ, 11,600 for the Dow, and the S&P hits the ground somewhere between 1200 and 1180. Unfortunately, that unwanted present doesn’t come with a gift receipt.
Either way, the credit card bill will come due after the first. And just like your holiday shopping, the best strategy is to be prudent with your money, seeking out only the greatest values.
TEN will be on the lookout for stock market bargains in the week ahead, just make sure you include us in your holiday plans. Our elves are working overtime to find that something special we can celebrate together.
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