US - Market Direction 01 (May 08 - Jul 08)

[kennynah]

245am 16may08 fri morning +8gmt

basically...tua ho or tua pai at this juncture...

i am staring at all the major indexes...monitoring their movements....like yesterday it is now continuing to show strength in maintaining their positions...BUT yesterday, u will recall that at about 245am....everything started declining..

it is now 245am...if it shows strength until the end...i am confident, the indexes will cheong tomorrow and continue bullish next week....

sp1418 is very critical in setting mood...it's been going at 1415/6 whole night...swee

DOW is also resisted choon choon at 12,948 (10pts away frm now)

naz is way past the 61.8% fibo and is staying strong at 2521

so, let's watch the last 1hr...

my only headache remains on VIX which is now at 16.85

good luck to all....

[kennynah]

ok folks, let's skip the chit chat and zoom straight in to the TA of SP500.... it's looking pretty GOOD !

Now, we have said several times that ~1418 is the resistance for SP500....tonight, S&P500 slowly but steadily crossed that resistance... what's more important is that SP500 closed at a high of 1423 and added 15 whopping points

DOW, also crossed its immediate resistance of ~12950 and closed 12993 adding on 94points

Nazdaq not to be a laggard, added some 37 points up and closed at 2534

in all accounts, we have a "San Zong Chai" winner tonight...

Oil relented earlier to just below $121pbl (before settling at ~$124 again)

Gold (jun) is at ~881/ounce (~$15 gains)

However, we have an issue with CBOE VIX, which closed at 16.30 ... this low is only matched in Oct07... so, do take note note of this potential party pooper...

click here to see a bigger and clearer picture



and by the way...the excuse for the rally :

declining oil prices(only for a moment, oil dropped some $3) and revived activity on the deal-making front fueled technology stocks, helping offset a round of weak economic reports.

The three biggest drivers were today's economic data stream was neutral, a pullback in energy prices is positive, and I would say there is a lot of buzz around the Internet space, with CNet taken out, and anyone that looks like them is now a target, and increased chatter around Yahoo, which explains the out-performance of the Nasdaq versus the Dow and S&P

(above from some news writer ....my england not so powderful)

[bertyeo]

vol on the nasdaq was GOOD....but vol on the broader S&P500 was lower.

[bertyeo]

In my view, the market has rallied closing at a new high for the month. Indeed a bullish move and must be respected. However, this move higher is occurring on very light volume. Technically speaking, this market is poised for a correction and it might occur shortly.

[HengHeng]

Recovery seems grainy. I'm expecting another round of correction as people get complacent come 3rd quater. Volumes on open interest on long have dropped on commercials. Another possiblity of a beh ki jiu lou scenario.

I think i mentioned before in wallstraits i'm expecting another round of movements come 3rd quater.

[kennynah]

let's take a look at a different Chart....this time, Phili SemiCon Index or better known as SOX...

see, how this baby has shown great strength, silently since late Apr. Remember that Nazdaq is highly correlated this SOX index, which measures SemiCon related companies...which is also Techs...

Before that, do a recap...a couple of points already pointed out by bertyeo...

NYSE volume was lighter by 3% on Thurs trade vs Wed. However, Nazdaq was 4% heavier in turnover. This solid Candle can be seen as a Accumulation Day. Thurs' Naz P/V movement can be attributed to Institutional buyings bcos, it rose substantially and ended intraday high. Retailers do not have such powder. Naz's Adv/Dec Ratio was 4 to 1, while NYSE Adv/Dec ratio was 7 to 2... both showed buying interests.

One big reason for Naz superb strength last night, was SOX.....which rose 2.1%. What's more critical is that it is stayed above 200MA. This is the 1st time since Nov07.... It first crossed MA50 in mid Apr08, but nothing beats crossing MA200, as a bullish indicator... one day does not make a rally, 2 days in a row, shows better strength...u see it, so do millions of other traders... dont fight the trend for now..

so, just be aware that SOX has awaken and with it, means, several semicon and tech stocks... the same applies to Nazdaq-100 Index (NDX)...very similar pattern, if not even more pronounced positively.

again, nothing goes up or down in a straight line.... patience is required to find a good entry point. but in a short term, things are looking up....who knows what will happen in the mid term....





Next, i cannot stress enough the danger of a low low VIX, which has always been a bane to any rally potential.

Finally, I touch on rising Oil prices, which is commonly seen as a dampener to upside push for equities...
Yesterday, oil dropped 3% initially, only to recover all losses by end of day....Oil Service HOLDRs Trust (OIH) shows this...and more importantly, it shows that a NEW high has been achieved on HIGH volume... now, we will never know if it will head higher...but this new high price was achieved after several attempts lately. We wont know. We just need to be watchful of this is a key chart.



Good luck folks...

[winston]

VIX too low. People are too complacent. Any bad news ( and there are plenty around ) may start the stampede.

However, it's not the time to buy a puts on the indices yet. I need some fear to come back first.

In the meantime. I'm lightening on my exposure to equities. Calm before the storm ? ( I'm starting to sound like Dr. Doom :p )

[millionairemind]

Most of the US indices closed the week above their 200DMA.. very positive sign.

In this uptrend that started on March 20, they have recaptured the losses for the correction that started on Jan 7... another very positive sign.

NYSE shorts continue to edge higher at a current 5 yr high.. Another couple of good pieces of news will force alot of short covering and another strong rally..

Not a call to buy/sell..

[winston]

Nothing new here...

==================================
by John Mauldin

Sell In May and Go Away
Numerous studies show that since World War II, as much as 99% of stock market returns have been generated between November 1 and May 1. Good friend and fishing buddy David Kotok of Cumberland Advisors sums it up nicely:

"According to the Ned Davis (NDR) database, starting in 1950, $10,000 invested in the S&P 500 Index every May 1st and then liquidated every October 31st would only be worth $10,026 today. That's right: had you stayed out of the stock market from November through April and only been in the market from May through October, you would have had no change during the last 57 years. 21 of those years would have been negative; 36 were positive. This happened during the same period that stock prices were rising about 75% of the time and markets made extended upward moves.

"Consider the results of the reverse strategy. Buy the S&P 500 Index on November 1st and sell all your stocks on May 1st. The outcome is dramatically different. Your original $10,000 would now be worth $372,890 as of April 30th closing prices in 2008. Out of the 58 periods you would have had positive results in 45 of them and negative results in only 13 years."

David goes on to show research at www.cumber.com as to why he thinks you should hold off on selling. I disagree, but then the stock market has been confirming David's position. My thought is that the Continuing Crisis will put pressure on corporate earnings throughout the summer, with more earnings disappointments at the end of this quarter.

Earnings disappointments are the stuff of bear markets. Richard Russell, one of the more astute market observers and in the past a serious bear, thinks we are now in a bull market. Dennis Gartman is now a bull. How do you argue with such astute traders?

I am sure Larry Kudlow will argue that the markets are telling us a recovery is imminent because the markets are rising. Nevertheless, I think this could be a very rocky summer for the markets in general. I look back to 2001-02 and find three bear market rallies of 20%. The market evidently did not know as much as it thought. But then, what do I know? If you have specific stocks you like, or are a trader, then that is fine. But for those whose only real equity choice in the retirement plan of investment in a long-only index, I would find one of the other options in bonds

[winston]

Bill King (The King Report): Watch out for sucker rally

“The big sucker rally that we warned almost always follows March (1907, 1929, 1980), and sometimes April (1987) crises as well as soft Q1s in recession years (1990, 1991, 2000, 2001, 2002) is now occurring. And after such sucker rallies, an autumn debacle is a very high probability.

“For obvious reasons, permabulls, Street paper pimps and their stooges in the fin media mitigate the fact that financial firms are and must continue to raise enormous amounts of capital and overemphasize purported good news. This helps troubled entities that are in dire need of patsies. Ergo, as benign earnings as possible are crafted, and the US government crafts benign economic statistics.”

Source: Bill King, The King Report, May 15, 2008