Thread: Market Talk

http://www.tradesignal.com/default.a...p;thread=18085

02/11/05 04:33:05 PM
THE OUTLOOK



A Wobbly Start
The near term still remains uncertain, as stock market leadership has not rotated to fresh favorites


After a strong finish in 2004, the stock market got off to a wobbly start this year. Although most of the January losses in the S&P 500 were recouped by February 11, we remain cautious for the near term. Volume on advances is still not particularly robust, indicating to us that many of the institutional players remain on the sidelines.

Mark Arbeter, Standard&Poor's chief technical strategist, notes that gains in utilities, energy, and natural resources issues have caused much of the recent improvement. Arbeter believes that one of the key factors driving bull markets higher is institutional money rotating out of older favorites and into the latest momentum plays. Since the "old favorites" remain the current favorites, the bullish pattern isn't evident yet.

There has been recent strength in the "500" and the Dow, which may be poised to break out to new recovery highs. But the weaker action in the Nasdaq suggests more basing will be needed before the next leg of an advance can begin, according to Arbeter.

Money doesn't appear to be leaving the stock market in search of alternatives. In part, we believe that is because other investments do not look attractive at this point. The 10-year Treasury note recently offered a yield of 4.1%, down from 4.25% in mid-November. Gold, another investment alternative, has slid almost 8% from its 2004 high.

But interest rates on the short end of the yield curve are up, thanks to six boosts by the Fed. That makes money market funds and bank accounts more viable parking places for the cash of investors unsure of the current trend.

By the end of the year, Standard&Poor's economists expect the 10-year Treasury note to be yielding about 5%. That could provide more competition for the assets that would otherwise go into stocks. Even so, we expect that there will be profits to be made in the 2005 market.

the latin stalin at work:

http://news.bbc.co.uk/1/hi/world/americas/4263025.stm

NICE:

Saudi Arabia increases oil production
By UNITED PRESS INTERNATIONAL
Published February 12, 2005

RIYADH, Saudi Arabia -- Western oil company executives are convinced the world's largest oil producer is increasing its output, the Financial Times reported Saturday.

Saudi Arabia, which controls about a quarter of the world's crude oil reserves, recently said it plans to double the number of drilling rigs operated by state-owned Saudi Aramco to find and develop new oil and gas fields, the Financial Times said.

"Saudi Aramco's target is to have 70-plus drilling rigs working by the end of 2005," said a Saudi Aramco official. That's a doubling of the number of rigs Saudi Aramco was running in December.

Such comments drew little attention, initially. But earlier this month the kingdom let several big contracts for energy sector expansion.

"They are changing their management philosophy from just replacing capacity to increasing capacity," an oil company executive told the Times. He added Saudi Aramco had also increased its annual budget for exploration and development activities by about 15 percent.


LINK: http://www.wpherald.com/Business/storyview.php?StoryID=20050212-074256-8594r

Monday Morning Outlook
By Christopher Johnson


For the most part, the market continues to do a dance at the top of its recently drawn range, teasing investors with the prospect of a strong February after a lackluster January performance. The Dow Jones Industrial Average (DJIA – 10,796.0) and other major indices nudged to new 2005 closing highs as Friday's trading surged upon rumors that Kim Jong-Il had been deposed in North Korea. This news sent traders into buy mode until early afternoon when the major indices began to drift from their intraday highs. The intraday surge reminded me of early November 2004 when intraday volatility to the upside was impossible to trade against as sideline investors were looking for any reason to jump into the market. What better reason than because everyone else is, right? So are we in the same situation now, when institutional traders, moving millions with the push of a button, are ready to drive the market? Given that our sentiment gauges continue to show that investors haven't cooled their optimistic outlooks just yet, I'm not quite ready to buy stocks with one hand, let alone both.

Hi Tom,welcome back from your ski trip. Question- what does it mean when someone says they see a ' w ' forming in the market chart? Is that a good thing or not?In the small cap chart between first part of Jan to first part of Feb would that be a ' w ' ? Thanks

http://bigcharts.marketwatch.com/int...?symb=95899W10

The "W" is an actual formation created by a stock, index, etc. chart. It is usually a positive bottoming formation meaning a low has been tested and it has held.

The W formation is alsoknown asthe "double bottom." As Tom said, it usually showsthatthe price has hit a support level two times and is now moving up.

The Reverse W is alsoknown asthe "double top." In this instance,the price has hit a resistance level and is usually headed downward.

Nice pic, Tom.

saraho wrote:

The Reverse W is alsoknown asthe "double top."

Why don't they just call it an "M"? Or is this like "rear-end load"?

Double-bottom...yup...handy for shaking out weaker investors. Don't forget to check volume (I constantly have to remind myself to check volume).



saraho wrote:

Nice pic, Tom.

Ya! He looks like someone....who....?

The increase in the I fund today seems to almost totally be attributable to a decline in the dollar. Dollar is currently down .75% on the day and I fund is up .85%. Other equity averages are flat to slightly down.

Rolo wrote:

saraho wrote:

Nice pic, Tom.

Ya! He looks like someone....who....?

teknobucks?

This last hour of trading seems pretty important to the near term market tone as neither buyers nor sellers have taken charge today. No follow through on Friday's upside action but the bears have not been able to lose the buyers just yet. Are the bears or the bulls waiting on the sidelines to pounce on the last hour of trading, or will the market stay basically flat? (S&P is currently down 8 cents).

I fund again? Nice! Will the dollar roll over here or is this just a minor pullback? Big question.