Market Summary

With light trading as demonstrated by low volume days during this shortened week it was not a good one for the markets overall. Again, only gold managed to hold on to some gains while for the year it is about flat. That however is far better than the broad market which is down nearly 40% year to date. With next week a shortened week also it is not likely that the 40% number will be reduced by very much. The worst year on record for the S&P 500 was 1931 where the market was down 43.34%. The next worst year was 1937 where the market was down 35.03%. If the market is to close out the year at it current level that will make it the second worst year on record. Historic Calendar Year Returns for the S&P500 can be found here.
Next to gold, the Russell 2000 index performed the second best last week down only 0.50%. That is a somewhat bullish sign but what the future has in store we will just have to wait and see. Click on table to enlarge.

Happy Holidays

Wishing you the best this holiday season and in the new year!

Market Summary

Looking at the table below it can be seen the 4W (four week) column is nearly completely green. The only ETFs that are red are oil and gas and we know from the pump that the price of gas and oil have declined recently. This table displays price performance over time with the best performers at the top sorted by the YTD (year to date) column. Comparing this market summary with last weeks and the ones before that shows that the green column is moving to the right. This indicates that a bottom was put in and we are seeing prices going up over time. What is interesting here is that the EEM (Emerging Markets ETF iShares) is up over 39% and the Russell 2000 ETF is up over 26% in the last four weeks! This indicates riskier assets are rising faster which is what you expect at a bottom.

As a side note please be aware that there may be a bubble forming in bonds as the Fed is buying them up to drive the interest rates down to stabilize the housing market. The 30 day T-Bill is paying just a penny and the 90 day T-Bill is paying a nickle. The 10 year Treasury is paying just about 2% while the 30 year Treasury is paying 2.7%. In the FOMC meeting this week the Fed announced it would reduce the Feds Funds rate to 0 to 0.25% range to stimulate the economy. I will be posting a bond performance table sometime soon and more information to follow.

While the market is rising I still consider this a short or intermediate term rally that will allow many investors a time to get out. Many of the markets are bouncing up against the 50 day moving average. Currently the S&P500 50 day moving average is 898. We should break above that level with the current Santa Claus rally. The volatility index has been falling and when markets move higher in the face of bad news it is always a good sign and we have had plenty of bad news lately. Click on table to enlarge.

Market Summary

Have we made a bottom yet? As I stated before as long as the monthly closing price is below the 12 moving average we are in a bear market. This is the long term (monthly) view. The market fluctuates from extremes of oversold to overbought and back and forth again and again. In a bear market (long term view) when we are oversold we can have intermediate term (weekly) rallies and these are called bear market rallies. They are often violent rallies that retrace the downward trend of the market in a short period of time reclaiming 40, 50, or 60 percent. The volatility of the current market has been a great place for day traders who look at the short term (daily) moves in the market trading off the one hour and five minute charts. This market has not made a V shaped move but has made an L shape so far going sideways for the most part since the October low. Although November made a lower low we have come back off of that low to be about the same place we were at during the October low. There is a chart pattern called a head-and-shoulders formation and it would appear that we have made an inverted head-and-shoulders formation which is bullish. The weekly chart for last week has made a doji candlestick pattern which often appear at tops or bottoms and is a sign of change as neither the bulls nor the bears are dominant. What will the future hold? We will just have to wait and see. Click on table below to enlarge.

Market Summary

While last week as a whole was in the red it did make a stunning comeback on Friday to make a Key Reversal Day to the upside. Also, we had the breakout of a long term downtrend line to the upside in many of the markets. What does this mean? If we get follow through to the upside next week we could have a trend reversal pattern and start to make higher highs. If we gap open to the upside on Monday we will have created an Island bottom formation which is extremely bullish. In any event I expect some form of rally to occur, possibly as a result of the auto industry bailout, in which case we will see more green columns on the left side of the table below (recent past) and that will extend to the right side (longer term past). As can be seen in the table below the EEM, which is down over 50% YTD, has made a whopping 23.44% in the last two weeks. And the $RUT Russell 2000 index is up nearly 20% over the same period. Click on table to enlarge.