Market Update

Posted by Conrad
January 27, 2010

U.S. Markets – Tuesday 26 January, 2010 AMC

Just looking at those charts should make you nervous. If you weren’t in the market yesterday, you missed out on what it is really like to be in a nervy market where doubt and confusion rules and nothing makes sense. One thing was clear though … it was not a good day nor a good sign for the bulls.

The market went into the trading day very nervous about China’s concerns over inflation and tightening credit, the BOJ’s non-event on rates (unchanged at 0.1%), America’s silent but growing concerns with ever increasing commercial real estate defaults, another poor return on housing numbers and the CBO’s (Congressional Budget Office) estimates, including for the fiscal 2010 deficit.

In spite of the divergence between NASDAQ and NYSE, the market had one agenda and the closing price is evidence of that agenda. For two straight days, the market was unable to keep its gains, losing everything in the last hour. This is a familiar pattern to which, in the past, there was only one outcome … and it doesn’t favor the bulls at all.

Originally Posted by Conrad on Tuesday 26 January View Post
Yet again, the bulls don’t seemed convinced and the bears continue lurking and waiting for their next move.

Advancers outpaced Deciners by an average 1.14 to 1 on lower volumes (-1.33%) on Monday (avg +0.31%).

Advancers outpaced Deciners by an average 1.16 to 1 on lower volumes (-1.30%) on Tuesday (avg -0.26%).

How do you summarize such divergent internals? Let’s see if this makes sense … In spite of having a little more advancers than decliners, the market still lost a little bit on a day when volumes down quite a bit.

Thus, this market can rally all it wants because it only takes a few bears to bring down all those bulls.

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TECHNICAL UPDATE – WEDNESDAY 27 JANUARY, 2010 – BMO

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,194.29 -2.57 (-0.03%)
Volume: 217,297,012 (+0.91%)
Range: 110,155.60 – 10,285.13 (129.53 points)

Originally Posted by Conrad on Tuesday 26 January View Post
… it’s going to be hard for the market to find higher highs on Tuesday.

In spite of a triple digit day, DOW failed to keep its gains and fell into neutral in the last two hours. This is going to be a major hurdle for all three indices without the help of some really REAL good economic news. Earnings is now not going to be enough to help keep this market’s head above water hereon.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,203.73 -7.07 (-0.32%)
Volume: 675,475,645 (-23.21%)
Range: 2,195.44 – 2,227.89

S&P 500 INDEX (SPX: CBOE)
1,092.17 -4.61 (-0.42%)
Volume: 4,205,862,400 (+8.65%)
Range: 1,089.86 – 1,103.69

Wednesday is going to be big on earnings and news with three DOW components (BA, CAT and UTX) on the line along with some of the biggest names in their respective industries. Add to that mix the Fed’s FOMC announcement, more housing data (New Home Sales) and Obama’s State of the Union address and you have what is potentially the most volatile day for the week and possibly, the month.

With only three days left for this month including today, the DOW needs to recover  more than 236.40 points to close positive – that works out to three consecutive days of 78.80 point gains. The S&P500 has to recover 24.39 (8.13 daily) and the NASDAQ needs a massive 90.68 (30.23 daily). In terms of percentages, the benchmarks needs to average more than 2.32% gains over the next three days, starting today.

This is the day that will shade the color of January’s Barometer.

Market Matters

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