We are now at a point where the market is revisting the October 10 lows, and this appears to be the test of significant importance. It will not really matter if the market blows through these lows tomorrow and closes below them. Of more significant importance will be how the market acts on Monday. No matter what the market does on Friday, we need the market to close higher on Monday, or at least set itself up for a strong Turnaround Tuesday. Nonetheless, if we trade through the October 10 lows on Friday, and we are still trading below them on Tuesday, this market will be heading lower for the foreseeable future.
Keep your fingers crossed!
Scott Cole
www.bestdaytradingstocks.com
Wednesday, November 12, 2008
Friday, November 7, 2008
Stocks Rally in Spite of Weak Jobs Data
In spite of a weak jobs report today, and further concern regarding the auto industry, stocks managed to rally today, ending the dismal decline that began on Wednesday. The government reported that a total of 240,000 jobs were lost in October, slightly above estimates, and September lost more jobs than first reported. The nation’s unemployment rate now stands at 6.5%. Apparently, this bad news was priced into the market over the previous two days, and the market actually may have been expecting worse news. Nonetheless, it was a bad number and a reminder of just how weak this economy is currently.
The market will now be turning its eyes to Washington to see what Congress and the Bush administration, along with input from the income Obama administration can do to stimulate this dismal economy. However, the primary issue is that banks refuse to lend money to anyone at decent terms, even to the most qualified of loan applicants. This is in spite of the fact that the credit markets have thawed dramatically over the last couple weeks as the 3 month LIBOR has dropped from its high of about 4.8% to about 2.3% today.
Until the banks begin to lend money for car loans and home loans, and other business loans, this economy has no chance of improving. The federal bailout has simply allowed the big strong banks a chance to consolidate and strengthen their positions by buying distressed banks. Yet, there does not seem to be any outrage at this in Washington.
More to come!
Scott Cole
www.bestdaytradingstocks.com
The market will now be turning its eyes to Washington to see what Congress and the Bush administration, along with input from the income Obama administration can do to stimulate this dismal economy. However, the primary issue is that banks refuse to lend money to anyone at decent terms, even to the most qualified of loan applicants. This is in spite of the fact that the credit markets have thawed dramatically over the last couple weeks as the 3 month LIBOR has dropped from its high of about 4.8% to about 2.3% today.
Until the banks begin to lend money for car loans and home loans, and other business loans, this economy has no chance of improving. The federal bailout has simply allowed the big strong banks a chance to consolidate and strengthen their positions by buying distressed banks. Yet, there does not seem to be any outrage at this in Washington.
More to come!
Scott Cole
www.bestdaytradingstocks.com
Thursday, November 6, 2008
Stock Sell-off Continues Ahead of October Jobs Report
More weak economic news drove the stock market down another 400+ points today, as stocks have now lost almost 1,000 points in two days. The culprit today was weak retail data out of the nation’s big retails, some posting double digit losses in same store sales for October. Furthermore, the Big 3 automakers are seeking more handouts from the Federal Government. Traders suspect that if Congress bails out the automakers, companies from other industries may try to get their hands in the cookie jar as well. This will result in a massive Federal Deficit, and little room for the income Obama administration to maneuver through this economic minefield.
On the bright side, the Oil complex continues its slide, nearly breaking through the $60 level to the downside. Oh, how times have changed since the days of $150 dollar per barrel just a few months ago. Remember this…a trend in motion tends to stay in motion! The trend to the upside was far more choppy than this downtrend. This downtrend is more dangerous as it has not allowed traders many opportunities to enter short positions on pullbacks. Watch for continued low prices on weak economic data.
The other big news of the day was that the Bank of England cut interest rates by 150 basis points, an unprecendented move. The European Central Bank cut rates by 50 basis points. Initially, this was welcome news prior to the U.S. stock market open. But, the weak economic data immediately put a damper on that. The Dollar ended the day a little stronger against the major currencies and interest rates were relatively unchanged. Commodity prices, again, lead by the energies, were generally lower again today.
In regard to tomorrow’s trading, watch for a volatile reaction to the jobs report. The general consensus calls for job losses of 150 to 175K.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
On the bright side, the Oil complex continues its slide, nearly breaking through the $60 level to the downside. Oh, how times have changed since the days of $150 dollar per barrel just a few months ago. Remember this…a trend in motion tends to stay in motion! The trend to the upside was far more choppy than this downtrend. This downtrend is more dangerous as it has not allowed traders many opportunities to enter short positions on pullbacks. Watch for continued low prices on weak economic data.
The other big news of the day was that the Bank of England cut interest rates by 150 basis points, an unprecendented move. The European Central Bank cut rates by 50 basis points. Initially, this was welcome news prior to the U.S. stock market open. But, the weak economic data immediately put a damper on that. The Dollar ended the day a little stronger against the major currencies and interest rates were relatively unchanged. Commodity prices, again, lead by the energies, were generally lower again today.
In regard to tomorrow’s trading, watch for a volatile reaction to the jobs report. The general consensus calls for job losses of 150 to 175K.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Wednesday, November 5, 2008
Economic Reality Sets In, Stocks Plunge
It looked like today was going to be an inverse mirror image of yesterday, as stocks opened lower, and hovered around the down 300 points on the Dow level for much of the afternoon. Then, once again, the last hour selling kicked in, and the market got clobbered, off nearly 500 points on the Dow and 100 points on the Nasdaq.
The primary culprit today was a week ADP jobs report, a precursor to the government’s own employment report due out Friday. The ADP report held that over 150,000 jobs were lost in the private sector. The market was already lower when this report came out, but trended lower the rest of the day.
Many other markets flip flopped from yesterday as well. The Oil complex, Grains, and Metals all sold off sharply today after nice gains yesterday. Obviously, this was in response to the weak economic data. It is notable that on many of the commodity charts, there are small consolidation patterns within their current downtrends. A break below recent lows will indicate a continuation of those downtrends. This would not surprise me as there are still many analysts on the financial news programs suggesting that energy and commodity stocks are the place to be going forward. Always be a contrarian!
On the other hand, the interest rate futures continued their rally today. It seems that Treasury traders may have been anticipating today’s data yesterday, as they rallied yesterday in the face of a weak dollar and strong commodities. In the Forex markets, the Dollar did not move much today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The primary culprit today was a week ADP jobs report, a precursor to the government’s own employment report due out Friday. The ADP report held that over 150,000 jobs were lost in the private sector. The market was already lower when this report came out, but trended lower the rest of the day.
Many other markets flip flopped from yesterday as well. The Oil complex, Grains, and Metals all sold off sharply today after nice gains yesterday. Obviously, this was in response to the weak economic data. It is notable that on many of the commodity charts, there are small consolidation patterns within their current downtrends. A break below recent lows will indicate a continuation of those downtrends. This would not surprise me as there are still many analysts on the financial news programs suggesting that energy and commodity stocks are the place to be going forward. Always be a contrarian!
On the other hand, the interest rate futures continued their rally today. It seems that Treasury traders may have been anticipating today’s data yesterday, as they rallied yesterday in the face of a weak dollar and strong commodities. In the Forex markets, the Dollar did not move much today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Tuesday, November 4, 2008
Stocks, Commodities Surge on Election Day
The U.S. Stock Market scored big gains as Americans headed to the polls today. Asian markets were up strongly overnight, and the European markets followed suit in the morning. A solid earnings report by Mastercard also buoyed stocks in the U.S. Some pundits, however, attribute the rally as a relief rally in response to polls suggesting a solid Obama victory, and a view toward the future.
Due to the big rallies in stocks around the world today, commodities responded with a big rally of their own, lead by the energies. Crude Oil was up over $6 today, and these gains were mirrored in Heating Oil, Unleaded Gas and Natural Gas. Such a strong day in these markets suggests a bottom of at least short-term magnitude is now in place. Gains in commodities were seen across the board, including the metals, grains and others.
One surprising trend today was the move up in Treasury prices, resulting in lower yields. This was quite odd in view of the strength in the commodity markets, and the weakness in the Dollar against most of the currencies today in the Forex market.
Tomorrow will be another day, and I suspect the markets will at least settle down tomorrow. Later in the week, we have a jobs report that could provide some significant bad news.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Due to the big rallies in stocks around the world today, commodities responded with a big rally of their own, lead by the energies. Crude Oil was up over $6 today, and these gains were mirrored in Heating Oil, Unleaded Gas and Natural Gas. Such a strong day in these markets suggests a bottom of at least short-term magnitude is now in place. Gains in commodities were seen across the board, including the metals, grains and others.
One surprising trend today was the move up in Treasury prices, resulting in lower yields. This was quite odd in view of the strength in the commodity markets, and the weakness in the Dollar against most of the currencies today in the Forex market.
Tomorrow will be another day, and I suspect the markets will at least settle down tomorrow. Later in the week, we have a jobs report that could provide some significant bad news.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Monday, November 3, 2008
Stock Market Bides Its Time
The U.S. Stock Market traded within its narrowest range in weeks today, ahead of the all important Presidential Election on Tuesday. Volume was also extremely light, as the markets eked out a small gain for the day. The markets will be watching closely to see whether the Democrats are able to achieve a filibuster proof majority in the Senate. That will allow them to push through any agenda they wish, without any kind of consent from, or compromise with the Republicans. This includes increases in Capital Gains taxes and taxes on dividends, two policy issues Wall Street does not like.
With that in mind, I suspect that the market will sell off a bit if the Democrats achieve that majority in the Senate. Otherwise, I anticipate a bit of a relief rally after the election, no matter who is elected.
In other markets today, the Dollar rallied sharply against the Euro and the Pound again today, reversing the losses of late last week. Treasuries perked up on week auto sales data, as October looks to be the slowest month of sales in 25 years.
Commodity prices were mixed, with the energies sharply lower and grain markets up a bit today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
With that in mind, I suspect that the market will sell off a bit if the Democrats achieve that majority in the Senate. Otherwise, I anticipate a bit of a relief rally after the election, no matter who is elected.
In other markets today, the Dollar rallied sharply against the Euro and the Pound again today, reversing the losses of late last week. Treasuries perked up on week auto sales data, as October looks to be the slowest month of sales in 25 years.
Commodity prices were mixed, with the energies sharply lower and grain markets up a bit today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Sunday, November 2, 2008
Weekly Market Re-cap
As we noticed on Friday, the stock market ended a terrible month on a nice up note. Now we are faced with a huge election on Tuesday, and at this point, it is anyone’s guess how the market will react to a likely Obama victory along with significant Democratic gains in the House and Senate. On the one hand, the financial markets generally do not like the rhetoric that comes out of the Democrats, and the markets generally prefer a government where checks and balances are in place, such as a Republican President and a Democrat controlled Congress. Therefore, an Obama victory could lead to a sell-off.
On the other hand, there could be a relief rally as we finally get past the election and can look forward to a new administration. The focus will then be on the economy and corporate earnings. We already know that the 4th quarter is likely to be weak, but I suspect it may not be quite as weak as expected. I would also venture to guess that the stock market has discounted a significant recession already, and so any economic data that is not as bad as expected will be greeted favorably by the market.
In other markets, Treasury Futures at the long end of the curve sold off sharply again Friday in response to the continued decline in short term interest rates. This week, there will also be a new monthly jobs report, and a weak report could help stem the tide. For now, the trend is down, which means higher long term interest rates. I noted in my newspaper today a significant jump in mortgage rates, with the average around 6.5%. These rates won’t do anything to help the housing market.
The Dollar enjoyed solid gains across the board on Friday, with most strength against the Euro and the Pound. It looks to me that the Yen has likely topped out against the Dollar for now, but it appears that the Euro and Pound may need to test their recent lows against the Dollar before consolidating at these lower levels.
In the commodity markets, Gold was sharply lower, while Crude Oil actually managed a solid gain of nearly $2 on the session. Agricultural markets were generally mixed, with no real big moves on the day.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
On the other hand, there could be a relief rally as we finally get past the election and can look forward to a new administration. The focus will then be on the economy and corporate earnings. We already know that the 4th quarter is likely to be weak, but I suspect it may not be quite as weak as expected. I would also venture to guess that the stock market has discounted a significant recession already, and so any economic data that is not as bad as expected will be greeted favorably by the market.
In other markets, Treasury Futures at the long end of the curve sold off sharply again Friday in response to the continued decline in short term interest rates. This week, there will also be a new monthly jobs report, and a weak report could help stem the tide. For now, the trend is down, which means higher long term interest rates. I noted in my newspaper today a significant jump in mortgage rates, with the average around 6.5%. These rates won’t do anything to help the housing market.
The Dollar enjoyed solid gains across the board on Friday, with most strength against the Euro and the Pound. It looks to me that the Yen has likely topped out against the Dollar for now, but it appears that the Euro and Pound may need to test their recent lows against the Dollar before consolidating at these lower levels.
In the commodity markets, Gold was sharply lower, while Crude Oil actually managed a solid gain of nearly $2 on the session. Agricultural markets were generally mixed, with no real big moves on the day.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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