Well, last week proved to be quite an interesting week for stocks. Normally, since it is a holiday week, there is seasonal favorability. The market got off to a good start on Monday, but failed to build on its gains over the next two sessions. Then, while we were enjoying the Thanksgiving holiday, turmoil erupted in the Middle East, as news out of Dubai suggested there may still be some hangover from the global real estate problems. Global stock markets were down sharply on Thursday, and opened lower on Friday. In the U.S., our markets needed to play a little catch up, and we opened down significantly, trading over 200 points to the down side on the Dow. But, it was a holiday shortened session with light volume, and the markets closed a bit off the lows.
We have a big week ahead. Early in the week we will see if there is any further fallout to the Dubai situation. Retailers will report how the official start to the holiday shopping season went. Then on Friday, there will be a new unemployment report, ahead of which President Obama is convening a jobs summit in an act of desperation to help out Democrats heading into the 2010 election cycle.
As usual, pay close attention to the Dollar. The strong correlation between Dollar weakness and stock market strength is still in place.
Scott Cole www.bestdaytradingstocks.com
Sunday, November 29, 2009
Wednesday, November 25, 2009
Dollar Plunges, Stocks Barely Move
U.S. stocks ended the day barely to the upside, even as the Dollar was routed in Forex trading. The Dollar closed at 14 year lows against the Yen. The so called Yen carry trade has been fueling the rise in stocks since March, but they barely moved today. Commodities, on the other hand, enjoyed big gains...particularly in energies and precious metals. Gold was up $25 on the day at last check, trading at $1,191 in the cash market.
Sooner or later, stocks will start to not like such a weak dollar. It is also noted that there is tremendous correlation among most markets. As the dollar falls, stocks, bonds and gold have risen. Just imagine what will happen if there is any sort of spike in the Dollar caused by a potential geopolitical crisis, or if the Fed suddenly sees that it is time to start raising rates.
In my view, this is just another asset bubble. Even when stocks rise off of bear market lows, they never move as high, and as quickly as this market has.
Happy Thanksgiving!
Scott Cole www.bestdaytradingstocks.com
Sooner or later, stocks will start to not like such a weak dollar. It is also noted that there is tremendous correlation among most markets. As the dollar falls, stocks, bonds and gold have risen. Just imagine what will happen if there is any sort of spike in the Dollar caused by a potential geopolitical crisis, or if the Fed suddenly sees that it is time to start raising rates.
In my view, this is just another asset bubble. Even when stocks rise off of bear market lows, they never move as high, and as quickly as this market has.
Happy Thanksgiving!
Scott Cole www.bestdaytradingstocks.com
Monday, November 23, 2009
Dollar Falls, Stocks Rally, As Usual
U.S. Stocks opened strongly to the upside this morning, and held up all day, as the Dollar declined in Forex trading. Someone keeps on forgetting to turn off this broken record!
Another "as usual" though; volume was light. In fact, considering the size of the price move, volume was downright abysmal. Less money is going into these up days, and that can't be good. Volume will continue to lighten up the rest of this holiday week, and that can lead to increased volatility. As usual, pay attention to the Dollar.
The day proved to not be easy for daytraders, except very short term scalpers. Most of the big moves in individual stocks occurred in the first 30 minutes. After that, many stocks that traded nicely to the upside in the first half hour simply flattened out the rest of the day.
Scott Cole www.bestdaytradingstocks.com
Another "as usual" though; volume was light. In fact, considering the size of the price move, volume was downright abysmal. Less money is going into these up days, and that can't be good. Volume will continue to lighten up the rest of this holiday week, and that can lead to increased volatility. As usual, pay attention to the Dollar.
The day proved to not be easy for daytraders, except very short term scalpers. Most of the big moves in individual stocks occurred in the first 30 minutes. After that, many stocks that traded nicely to the upside in the first half hour simply flattened out the rest of the day.
Scott Cole www.bestdaytradingstocks.com
Sunday, November 22, 2009
Weekly Stock Market Review
As mentioned in my previous post this weekend, the U.S. stock market ended a quiet week on a quiet note on Friday. However, as we head into the holidays, we enter a pretty strong time frame for the stock market on a seasonal basis. Since we have had such as strong rally from the March lows, the market is actually significantly higher on the year. As a result, many fund managers have been left on the sidelines, missing much of this rally. You can bet that these fund managers will try to pile into stocks that have been leading the rally.
I suspect that many of the trends that have been in place during the bulk of this rally, such as a declining Dollar and rising commodity prices, will continue into the rest of the year. The leading industry groups continue to be Silver, Gold, metals/mining, and catalog businesses.
Heading into the Thanksgiving week, the market looks poised to make a move higher after a modest pullback over the last several trading days. I like the patterns I see on the major averages and many stocks in terms of setting up for a decent two or three day rally in the coming week. When you add to this that this is a seasonally favorable week, daytraders and short term swing traders should consider that the odds are likely in favor of the long side over the next several trading days.
There is one caveat to this little forecast, if you could call it that. If there is any significant weakness on Monday that carries the S&P 500 down below 1080, then I would anticipate further weakness.
Scott Cole www.bestdaytradingstocks.com
I suspect that many of the trends that have been in place during the bulk of this rally, such as a declining Dollar and rising commodity prices, will continue into the rest of the year. The leading industry groups continue to be Silver, Gold, metals/mining, and catalog businesses.
Heading into the Thanksgiving week, the market looks poised to make a move higher after a modest pullback over the last several trading days. I like the patterns I see on the major averages and many stocks in terms of setting up for a decent two or three day rally in the coming week. When you add to this that this is a seasonally favorable week, daytraders and short term swing traders should consider that the odds are likely in favor of the long side over the next several trading days.
There is one caveat to this little forecast, if you could call it that. If there is any significant weakness on Monday that carries the S&P 500 down below 1080, then I would anticipate further weakness.
Scott Cole www.bestdaytradingstocks.com
Friday, November 20, 2009
Stocks End Week With Modest Losses
U.S. Stocks closed very modestly lower on Friday in very dull trading, to end a very dull week of trading. As a result, the week ended mixed, with the Dow Industrials posting a modest gain, and most other averages posting modest losses on the week.
However, the daily trading pattern looks promising for a decent move to the upside next week, which is also a seasonally favorable week for the market.
More to come over the weekend!
Scott Cole www.bestdaytradingstocks.com
However, the daily trading pattern looks promising for a decent move to the upside next week, which is also a seasonally favorable week for the market.
More to come over the weekend!
Scott Cole www.bestdaytradingstocks.com
Thursday, November 19, 2009
Stocks End Day Lower, Dollar Up Modestly
U.S. Stocks finished they lower, but well off session lows on Thursday, but remain up solidly on the week. Stocks opened lower on the back of Dollar strength, but that strength evaporated late in the day, and allowed the market to bounce a bit off its lows. Overall though, it was a pretty weak market. One thing I definitely did not like about the price action was the weakness in Apple. Apple was down over $5 on the day, on rising volume. The overall market volume was also higher today.
In other markets, Gold eked out a small gain, while Crude Oil was lower by over $2. Otherwise, it was a fairly quiet day.
Keep an eye on the Dollar on Friday!
Scott Cole www.bestdaytradingstocks.com
In other markets, Gold eked out a small gain, while Crude Oil was lower by over $2. Otherwise, it was a fairly quiet day.
Keep an eye on the Dollar on Friday!
Scott Cole www.bestdaytradingstocks.com
Monday, November 16, 2009
Like a broken record, U.S. stocks enjoyed a nice Monday rally, as did many commodities, as the Dollar traded at its lowest level since August 2008. The Yen was the largest benefactor of the Dollar decline today, as the carry trade continues. The Dollar also fell against the Euro and British Pound.
Also benefiting from the Dollar decline was Gold, Silver, Crude Oil, and Copper, among other markets. Interestingly, in spite of a big rise in commodity prices and stocks, the 10 Year Treasury Note also rallied sharply, lower yields to their lowest levels since early October.
The question is, how long can we have a declining Dollar, low interest rates, a fast rising stock market, and higher commodity prices before something gives? I suspect we continue to see these trends through the end of the year. However, when the trend following commodity traders and hedge fund managers decide to head for the exits, they all tend to do so at the same time. You can definitely expect very sharp corrections to occur when that happens.
I suggest that the trends continue through the end of the year since fund managers will want to show strong yearly performance results to show their investors. Once that occurs, they will have no problem liquidating positions at the first sign of any kind of trouble for the markets. or when it becomes obvious that central banks have started to hit the liquidity breaks.
Stay tuned!
Scott Cole www.bestdaytradingstocks.com
Also benefiting from the Dollar decline was Gold, Silver, Crude Oil, and Copper, among other markets. Interestingly, in spite of a big rise in commodity prices and stocks, the 10 Year Treasury Note also rallied sharply, lower yields to their lowest levels since early October.
The question is, how long can we have a declining Dollar, low interest rates, a fast rising stock market, and higher commodity prices before something gives? I suspect we continue to see these trends through the end of the year. However, when the trend following commodity traders and hedge fund managers decide to head for the exits, they all tend to do so at the same time. You can definitely expect very sharp corrections to occur when that happens.
I suggest that the trends continue through the end of the year since fund managers will want to show strong yearly performance results to show their investors. Once that occurs, they will have no problem liquidating positions at the first sign of any kind of trouble for the markets. or when it becomes obvious that central banks have started to hit the liquidity breaks.
Stay tuned!
Scott Cole www.bestdaytradingstocks.com
Sunday, November 15, 2009
Weekly Stock Market Review
U.S. Stocks ended the week with a positive note, and finished with a two week winning streak. A weak Dollar again provided the prescription for the rally, as the market shrugged off a weak consumer sentiment survey. The Russell 2000 actually lead with a gain over 1% on the session, followed closely by the Nasdaq and Nasdaq 100.
This coming week could prove to be an important juncture in the markets. The Dow Industrials have already broken out to new highs for this bull move. The S&P 500 and Nasdaq indexes are sitting just below their highs, while the Russell 2000 and Dow Transports are well below their highs. If the Nasdaq and S&P 500 can move decisively above their highs, that will confirm that this bull move has more legs.
As always, I believe there are significant headwinds out there for the market. However, you can bet that if the averages continue higher, fund managers will have to plunge in and buy. They need to do their best to beat the averages for the year, and since the long side has been the place to be for the last eight months, they must be long, and they must be in the hot stocks.
Most of the headwinds facing the market are longer term issues. As such, since this is also a seasonally favorable time of year for the market, it is best to just stay on the long side, but I do not recommend the use of leverage.
Heading into Monday, we have a two week winning streak for Mondays as well. Don't be surprised by any strength in the market on Monday.
As always, since Friday was a positive day for the stock market, there were some nice daytrades. Check out the chart of CSIQ below. This stock was set up nicely by one of the patterns I like to see for a stock ready to make a big move to the upside. After opening slightly higher on the session, the stock did not disappoint, showing a 10% gain on the day.
Have a good week!
Scott Cole www.bestdaytradingstocks.com
This coming week could prove to be an important juncture in the markets. The Dow Industrials have already broken out to new highs for this bull move. The S&P 500 and Nasdaq indexes are sitting just below their highs, while the Russell 2000 and Dow Transports are well below their highs. If the Nasdaq and S&P 500 can move decisively above their highs, that will confirm that this bull move has more legs.
As always, I believe there are significant headwinds out there for the market. However, you can bet that if the averages continue higher, fund managers will have to plunge in and buy. They need to do their best to beat the averages for the year, and since the long side has been the place to be for the last eight months, they must be long, and they must be in the hot stocks.
Most of the headwinds facing the market are longer term issues. As such, since this is also a seasonally favorable time of year for the market, it is best to just stay on the long side, but I do not recommend the use of leverage.
Heading into Monday, we have a two week winning streak for Mondays as well. Don't be surprised by any strength in the market on Monday.
As always, since Friday was a positive day for the stock market, there were some nice daytrades. Check out the chart of CSIQ below. This stock was set up nicely by one of the patterns I like to see for a stock ready to make a big move to the upside. After opening slightly higher on the session, the stock did not disappoint, showing a 10% gain on the day.
Have a good week!
Scott Cole www.bestdaytradingstocks.com
Friday, November 13, 2009
Dollar Weak, Stocks Rise, As Usual
U.S. Stocks were up again Friday, resulting in a two week winning streak. Earnings and a weak Dollar were the primary drivers, as stocks shrugged off a weak Consumer Sentiment report that suggests holiday spending may not be very strong.
The Dollar weakness resulted in more strength in Gold and commodities although crude oil broke down through some recent support before closing just over $76.
Again, volume was light on an up day. Volume was markedly lower than on yesterday's sell off.
More to come over the weekend.
Scott Cole www.bestdaytradingstocks.com
The Dollar weakness resulted in more strength in Gold and commodities although crude oil broke down through some recent support before closing just over $76.
Again, volume was light on an up day. Volume was markedly lower than on yesterday's sell off.
More to come over the weekend.
Scott Cole www.bestdaytradingstocks.com
Thursday, November 12, 2009
Stocks Decline on Dollar Strength
U.S. Stocks declined on Thursday as the Dollar managed a decent rally, after making new lows for the current downtrend this week. Same old story here. As the Dollar falls, stocks rise, as it is seen as a boost to companies that compete in overseas markets. The falling Dollar also has provided a boost to Oil prices, and therefore Oil related stocks. Today, these stocks took a bit hit.
At some point this particular relationship will change, a falling Dollar will result in inflationary pressures. Inflation perceptions will ultimate result in higher interest rates, irregardless of what the Fed does. Higher interest rates are never a good thing for stocks.
Nonetheless, this is the market we are in. It is notable that the stock market appears to be struggling at these levels, and volume on down days continues to be higher than on up days. It is also clear that the stock market leadership has narrowed significantly. The Dow Industrials are the only average to make new highs for the move in the past week. None of the other major averages has made a new high. In fact, the Russell 2000 remains about 6% below its October highs.
In a recent post, due to the Dow breaking out to new highs, I mentioned that intermediate term traders needed to get back into the market with high momentum stocks breaking to new highs. However, I added, that this should be done with caution, and today's action bears that out. All traders and investors should be very cautious at this point due mainly to the policies that the powers that be in Washington are trying to push through, and the extremely high government debt.
Going forward, I expect that the daytrading opportunities will be just as plentiful on the short side as they will be on the upside.
Stay Tuned!
Scott Cole www.bestdaytradingstocks.com
At some point this particular relationship will change, a falling Dollar will result in inflationary pressures. Inflation perceptions will ultimate result in higher interest rates, irregardless of what the Fed does. Higher interest rates are never a good thing for stocks.
Nonetheless, this is the market we are in. It is notable that the stock market appears to be struggling at these levels, and volume on down days continues to be higher than on up days. It is also clear that the stock market leadership has narrowed significantly. The Dow Industrials are the only average to make new highs for the move in the past week. None of the other major averages has made a new high. In fact, the Russell 2000 remains about 6% below its October highs.
In a recent post, due to the Dow breaking out to new highs, I mentioned that intermediate term traders needed to get back into the market with high momentum stocks breaking to new highs. However, I added, that this should be done with caution, and today's action bears that out. All traders and investors should be very cautious at this point due mainly to the policies that the powers that be in Washington are trying to push through, and the extremely high government debt.
Going forward, I expect that the daytrading opportunities will be just as plentiful on the short side as they will be on the upside.
Stay Tuned!
Scott Cole www.bestdaytradingstocks.com
Tuesday, November 10, 2009
Ho Hum Day For Stocks
U.S. stocks ended the day mixed, with the Dow Jones and Nasdaq 100 posting modest gains on light volume while the other major averages traded lower. The Dollar traded within a choppy and narrow trading range, and the stock market essentially followed suit.
The big news of the day for stocks was Priceline posted earnings that tripled in the 3rd quarter. The stock closed up over 17%. Surprisingly, the Nasdaq Composite failed to have a positive close as a result.
The bottom line was that this was a boring trading day, and day traders would have been smart to call it a day early and go play some golf!
Scott Cole www.bestdaytradingstocks.com
The big news of the day for stocks was Priceline posted earnings that tripled in the 3rd quarter. The stock closed up over 17%. Surprisingly, the Nasdaq Composite failed to have a positive close as a result.
The bottom line was that this was a boring trading day, and day traders would have been smart to call it a day early and go play some golf!
Scott Cole www.bestdaytradingstocks.com
Monday, November 9, 2009
Stocks Rally on G-20 news
U.S. Stocks followed up on a rally that started overseas on the back of news out of a G-20 meeting of finance ministers indicating that they are not ready to start pulling back on the liquidity they have been injecting in support of the global economy. The Dollar plunged and is testing its most recent lows again, after making a multi-week high just last week.
The result was a big rally across the board, which carried the Dow Jones Industrial Average to new bull market highs, over 10,200. Volume was moderately higher than the last couple of trading sessions.
Commodity prices rallied on the news, with oil prices up $2 and Gold rallying to new all time highs over $1,100.
Not surprisingly, we had some big individual stock moves, resulting in some nice day trades! The trade of the day was TRW. Along with the overall market, it gapped to the upside, and then followed through on its opening strength with continued strength in the first part of the trading day. Traders applying any type of opening range breakout strategy could just hop on board and ride the trend to a gain of at least $1.00 per share depending upon the entry price.
For intermediate term traders, you pretty much have to hop back on the train again on a session like today if you had gone to cash during the recent pullback. The market appears to be re-establishing its upside momentum, although there appears to be a narrowing of leadership, as smaller stocks are nowhere near the recent highs as gauged by the Russell 2000. However, now is not a time to apply much leverage.
Stay tuned!
Scott Cole www.bestdaytradingstocks.com
The result was a big rally across the board, which carried the Dow Jones Industrial Average to new bull market highs, over 10,200. Volume was moderately higher than the last couple of trading sessions.
Commodity prices rallied on the news, with oil prices up $2 and Gold rallying to new all time highs over $1,100.
Not surprisingly, we had some big individual stock moves, resulting in some nice day trades! The trade of the day was TRW. Along with the overall market, it gapped to the upside, and then followed through on its opening strength with continued strength in the first part of the trading day. Traders applying any type of opening range breakout strategy could just hop on board and ride the trend to a gain of at least $1.00 per share depending upon the entry price.
For intermediate term traders, you pretty much have to hop back on the train again on a session like today if you had gone to cash during the recent pullback. The market appears to be re-establishing its upside momentum, although there appears to be a narrowing of leadership, as smaller stocks are nowhere near the recent highs as gauged by the Russell 2000. However, now is not a time to apply much leverage.
Stay tuned!
Scott Cole www.bestdaytradingstocks.com
Sunday, November 8, 2009
Weekly Stock Market Review
U.S. Stocks closed the week of trading essentially unchanged on Friday, but in the process, ended a two week losing streak. The S&P 500 traded the last three sessions to the upside, but on each successive day, volume shrunk. While it is certainly possible for a rally to occur on Monday, since Friday's trading range was quite narrow on low volume, the odds suggest some difficulty for the market trading to higher levels in the next couple of days.
As usual, the leading groups during the rally this week were commodity based industries, with Silver miners leading the way. Drug related industries were a close second behind Silver, while the Metals & Mining, Copper, and Steel & Iron groups rounded out the top five industries.
In other markets, Gold was the headline mover among commodities, as it broke out to new all time highs, and tested the $1,100 per ounce level. This helped pull Silver higher, which is again testing $18 per ounce.
After rallying to 4 week highs, the Dollar Index sold off late in the week and closed lower for the week. In spite of the Dollar pullback late in the week, 10 Year Treasury Notes managed to rally on word of the 10.2% unemployment figure reported in Friday's release of government employment figures. This is the highest level since the 1981-82 recession.
Over the weekend, the U.S. House of Representatives passed its version of a healthcare reform bill, with a $1.2 trillion price tag. While many view this version of the bill to be dead on arrival as debate moves to the Senate, it still does suggest that some form of healthcare reform will be passed in the foreseeable future, probably early next year. While there does appear to be some burden on business, the stock market has shrugged this off so far. It will be interesting to see how the market reacts as the bill moves closer to passage.
As earnings season is nearly over, all focus will return to economic data. With the holidays ahead, you can bet there will be a lot of attention paid to retail sales.
Stay Tuned!
Scott Cole www.bestdaytradingstocks.com
As usual, the leading groups during the rally this week were commodity based industries, with Silver miners leading the way. Drug related industries were a close second behind Silver, while the Metals & Mining, Copper, and Steel & Iron groups rounded out the top five industries.
In other markets, Gold was the headline mover among commodities, as it broke out to new all time highs, and tested the $1,100 per ounce level. This helped pull Silver higher, which is again testing $18 per ounce.
After rallying to 4 week highs, the Dollar Index sold off late in the week and closed lower for the week. In spite of the Dollar pullback late in the week, 10 Year Treasury Notes managed to rally on word of the 10.2% unemployment figure reported in Friday's release of government employment figures. This is the highest level since the 1981-82 recession.
Over the weekend, the U.S. House of Representatives passed its version of a healthcare reform bill, with a $1.2 trillion price tag. While many view this version of the bill to be dead on arrival as debate moves to the Senate, it still does suggest that some form of healthcare reform will be passed in the foreseeable future, probably early next year. While there does appear to be some burden on business, the stock market has shrugged this off so far. It will be interesting to see how the market reacts as the bill moves closer to passage.
As earnings season is nearly over, all focus will return to economic data. With the holidays ahead, you can bet there will be a lot of attention paid to retail sales.
Stay Tuned!
Scott Cole www.bestdaytradingstocks.com
Thursday, November 5, 2009
Stocks Enjoy Broad Rally
U.S. Stocks rallied across the board on Thursday on the back of a variety of news items. Some retailers are reporting better than expected sales in October, suggesting the holiday season may give a lift to the economy. Weekly jobless claims dropped significantly, and it was reported that 3rd quarter productivity was up over 9%, higher than the previously reported 6.6%. Finally, the European and UK central banks held interest rates steady, but suggested they will be pulling back on debt purchases.
All of the major averages were up significantly, and closed at the highs of the day. Once again though, volume was low, although the Nasdaq averages had similar volume to yesterday.
The market had been oversold to the downside, and had pulled back to, and in some averages, below major support. The Dow Jones Industrial Average is still trading within an uptrend that really has not been broken. The other averages clearly have broken technical support levels and will find it more difficult to make new highs. More significant positive news on the economy will be required to keep the market going higher.
With all that in mind, it was a good day for day traders playing the long side. Yesterday I mentioned that the overall technical pattern of the markets on a short term basis was not favorable. However, that was over ridden with a strong trending move to the upside. The market started higher and never looked back all day. These are the kinds of days where daytraders can make spectacular gains. Check out the chart of AWI below. This stock brought day traders 10% on the day by trading a standard opening range breakout. This is the type of trade that can make your month!
Scott Cole www.bestdaytradingstocks.com
All of the major averages were up significantly, and closed at the highs of the day. Once again though, volume was low, although the Nasdaq averages had similar volume to yesterday.
The market had been oversold to the downside, and had pulled back to, and in some averages, below major support. The Dow Jones Industrial Average is still trading within an uptrend that really has not been broken. The other averages clearly have broken technical support levels and will find it more difficult to make new highs. More significant positive news on the economy will be required to keep the market going higher.
With all that in mind, it was a good day for day traders playing the long side. Yesterday I mentioned that the overall technical pattern of the markets on a short term basis was not favorable. However, that was over ridden with a strong trending move to the upside. The market started higher and never looked back all day. These are the kinds of days where daytraders can make spectacular gains. Check out the chart of AWI below. This stock brought day traders 10% on the day by trading a standard opening range breakout. This is the type of trade that can make your month!
Scott Cole www.bestdaytradingstocks.com
Wednesday, November 4, 2009
Stocks End Day Mixed After Fed Meeting
U.S. Stocks closed mixed after trading much higher in the afternoon following the Fed's announcement to keep interest rates unchanged. The Dow Jones rose to up as much as 140 points, before stocks sold off in the last hour.
The daily trading pattern suggests we may test the recent lows in the next couple of days. The Friday employment report will hold the key. Today's ADP report indicated another loss of 200,000 jobs. I still see CNBC analysts suggesting jobs are ready to turnaround, based upon recent productivity figures.
The Dollar was hit hard today, which is interesting, because the stock market did not go anywhere. Gold flirted with $1,100 before settling back down with a gain of a couple bucks. 10 Year Treasury yields were about 3.55% the last I saw, and that is a bit of a pop from around 3.41% earlier in the week.
I have no clue what the market will do in the next couple of days, but the pattern suggest a re-test of the recent lows should occur soon. The European and UK central banks meet tomorrow to discuss policy, but keep an eye on jobless claims here in the U.S. They have been quite steady as of late, and a lack of improvement may start an early sell-off before Friday's employment report.
Scott Cole www.bestdaytradingstocks.com
The daily trading pattern suggests we may test the recent lows in the next couple of days. The Friday employment report will hold the key. Today's ADP report indicated another loss of 200,000 jobs. I still see CNBC analysts suggesting jobs are ready to turnaround, based upon recent productivity figures.
The Dollar was hit hard today, which is interesting, because the stock market did not go anywhere. Gold flirted with $1,100 before settling back down with a gain of a couple bucks. 10 Year Treasury yields were about 3.55% the last I saw, and that is a bit of a pop from around 3.41% earlier in the week.
I have no clue what the market will do in the next couple of days, but the pattern suggest a re-test of the recent lows should occur soon. The European and UK central banks meet tomorrow to discuss policy, but keep an eye on jobless claims here in the U.S. They have been quite steady as of late, and a lack of improvement may start an early sell-off before Friday's employment report.
Scott Cole www.bestdaytradingstocks.com
Sunday, November 1, 2009
Weekly Stock Market Re-Cap
U.S. Stocks closed the week with significant losses on Friday, which sent the Nasdaq Composite, and a few other averages, to their first monthly losses since this bull run began in March. Based upon the market action of the past couple of weeks, it is clear we have entered correction mode. The character of the stock market has clearly changed. For instance, early morning gains have turned into late day losses. That is not characteristic of a market that will be trading higher. Also, individual stocks have taken hits AFTER reporting earnings above expectations.
I would add that it has seemed to me that most of the commentators on CNBC have been quite bullish heading into the last couple of weeks. They all point to a continued recovery in business inventories and continued stimulus spending as keys to an economic recovery, which should continue to boost the stock market. I continue to ask where the consumer spending will come from considering the fact that the residential real estate market is still weak, and with an unemployment rate that likely will head above 10% in the foreseeable future.
I have noted economist after economist suggesting that there is indeed a recovery going on in residential real estate. As such, this past week's report that new home sales were down in the latest month was a shocker to them. In my own neighborhood, I have seen one home sit on the market for over a year. Indeed, it is a flawed home, but now is priced well below its purchase price by the current owner four years ago. I have seen other homes in the neighborhood sit on the market for several months, much longer than normal.
I have been a commercial real estate appraiser for over 20 years. One recent study I conducted in my own area here in Harrisburg, Pennsylvania indicates that commercial real estate transactions are down about 40% since 2007. Capitalization rates have risen dramatically. Vacancy rates have been on the rise, and this is pressuring rental rates. It is clear that many properties purchased in the 2006-2008 period are under water in many locations around the country. Therefore, there will be another shoe to drop for this economy.
I believe this stock market rally has been quite bogus. I am sure that in March, we hit a significant low, and the market sold off more than it should have. But, a rally of nearly 60% since then seems unwarranted considering the headwinds we still face. Huge government deficits and an administration that seems to want to add more to them in spite of their words. An extremely weak Dollar. Oil prices back over $75 heading into Winter. A healthcare bill likely to add more of a burden to businesses, along with a push for a cap and trade bill on energy.
In any event, the market is getting quite volatile again. I think there is more room to the downside, but short sellers need to be very careful and nimble.
Scott Cole www.bestdaytradingstocks.com
I would add that it has seemed to me that most of the commentators on CNBC have been quite bullish heading into the last couple of weeks. They all point to a continued recovery in business inventories and continued stimulus spending as keys to an economic recovery, which should continue to boost the stock market. I continue to ask where the consumer spending will come from considering the fact that the residential real estate market is still weak, and with an unemployment rate that likely will head above 10% in the foreseeable future.
I have noted economist after economist suggesting that there is indeed a recovery going on in residential real estate. As such, this past week's report that new home sales were down in the latest month was a shocker to them. In my own neighborhood, I have seen one home sit on the market for over a year. Indeed, it is a flawed home, but now is priced well below its purchase price by the current owner four years ago. I have seen other homes in the neighborhood sit on the market for several months, much longer than normal.
I have been a commercial real estate appraiser for over 20 years. One recent study I conducted in my own area here in Harrisburg, Pennsylvania indicates that commercial real estate transactions are down about 40% since 2007. Capitalization rates have risen dramatically. Vacancy rates have been on the rise, and this is pressuring rental rates. It is clear that many properties purchased in the 2006-2008 period are under water in many locations around the country. Therefore, there will be another shoe to drop for this economy.
I believe this stock market rally has been quite bogus. I am sure that in March, we hit a significant low, and the market sold off more than it should have. But, a rally of nearly 60% since then seems unwarranted considering the headwinds we still face. Huge government deficits and an administration that seems to want to add more to them in spite of their words. An extremely weak Dollar. Oil prices back over $75 heading into Winter. A healthcare bill likely to add more of a burden to businesses, along with a push for a cap and trade bill on energy.
In any event, the market is getting quite volatile again. I think there is more room to the downside, but short sellers need to be very careful and nimble.
Scott Cole www.bestdaytradingstocks.com
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