Market outlook for week of Dec. 1st, 2008
Last week we saw a rising market as I said there would be and many were thrilled to see the Dow, S&P500 and the Nasdaq Composite Index. I have been asked through email and calls whether that rise was to be believed. Well of course it was to be believed any who bought ETF's or stock like Ford Motor, will tell you they made good money last week, especially if they sold to take the profit. But I think the real question which was behind their curiosity was whether the market rise was going to continue this week too?
No one can say with authority and certainty, what the week will do. But here are some facts about last week which should not be forgotten going into the week. First, even though there was a great rise in the 3 indexes mentioned above, 2 of the 3 did not go over the 20 day Moving Average. Only the Dow managed to close just above its 20 day Moving average. Secondly, if you look at a chart of the indexes along with a volume chart, you will notice the volume dropped off daily. When the price of a stock (or Index) goes up successively each day and volume drops off, it is usually an indicator of a change in direction, and in this case, down. If it rises for the week then the following week has an even higher probability of a pullback.
So, will the market rise this week? Well maybe early in the week yes but later in the week it may drop back. Remember the range of this channel from the bottom goes from about 7,300 to 9,500 on the Dow and we closed at 8,829 which is more than the mid point of the range. So the probability favors a pullback. My guess is that over time the range will tighten as many more play the spread like me. So we may have a new range of between 8,000 and 9,000 for a while before there is a breakout either to the upside or the downside again. That still is an 11% range and most can buy near the bottom of that range and sell near the top and repeat this many times. Those more skilled can not only buy at the bottom of the range individual stocks or Indexes but can also use ETF ULTRA Pro shares and ULTRA SHORT shares when the indexes are near the either end of the range.
In addition, this week we will know the Unemployment numbers for November and they will not be good. We will also get better info on Retail Sales. Early reporting suggests that Retail Sales are 3% above last year. I don't believe it and you shouldn't either. Many I have spoken to have cut back significantly on their purchases and I even saw reported that the wealthy have also cut back in expensive items. So, believe a 3% gain in Retail Sales at your own peril.
For example, as the market was rising I kept riding my ETF Ultra Pro shares of SSO until on Friday I sold them. At the same time Friday, the value of the ETF Ultra Short shares of SDS had dropped in price to below $90/share so I bought them. If the market goes up additionally in the first few days of this week, I will buy more shares of this at $88 and $86/share if the opportunity arises. I still own my shares of Ford and I see the stock continuing to rise right through the week. I see this stock going to $3-$4 in relatively short timeframe like 2 months. Did you know that 77% of Ford Motor shares are owned by Institutional Investors? So there is money to be made in the markets, but you must do it wisely, never committing cash you don't have to risk. All market "investing" is truly gambling. Any rational human being knows that and, like the Casino's, the game is rigged against the individual in favor of the house. The house here are the big boys who sleep every night because they have significant wealth and influence.
Good luck this coming week.
UPDATE Monday morning 6:45am.
Well the answer is in. Market is down over 300 points in the first 15 minutes of trading. Unrest and comments from China have fueled this early drop, as have comments that shoppers on Black Friday say they are done shopping and have completed their purchases by a whopping 36%. So the season may not be bailed out for Retail sales after all. I said if you believe that we are ahead of last year you do so at your own peril. SDS has risen sharply, up 8 plus points now to $96.35 which I bought for an average price of $89 last week and the SSDO I sold is down to $24.15. Ford continues to rise even with the Dow down 353 now as Ford is currently at $2.84.
No one can say with authority and certainty, what the week will do. But here are some facts about last week which should not be forgotten going into the week. First, even though there was a great rise in the 3 indexes mentioned above, 2 of the 3 did not go over the 20 day Moving Average. Only the Dow managed to close just above its 20 day Moving average. Secondly, if you look at a chart of the indexes along with a volume chart, you will notice the volume dropped off daily. When the price of a stock (or Index) goes up successively each day and volume drops off, it is usually an indicator of a change in direction, and in this case, down. If it rises for the week then the following week has an even higher probability of a pullback.
So, will the market rise this week? Well maybe early in the week yes but later in the week it may drop back. Remember the range of this channel from the bottom goes from about 7,300 to 9,500 on the Dow and we closed at 8,829 which is more than the mid point of the range. So the probability favors a pullback. My guess is that over time the range will tighten as many more play the spread like me. So we may have a new range of between 8,000 and 9,000 for a while before there is a breakout either to the upside or the downside again. That still is an 11% range and most can buy near the bottom of that range and sell near the top and repeat this many times. Those more skilled can not only buy at the bottom of the range individual stocks or Indexes but can also use ETF ULTRA Pro shares and ULTRA SHORT shares when the indexes are near the either end of the range.
In addition, this week we will know the Unemployment numbers for November and they will not be good. We will also get better info on Retail Sales. Early reporting suggests that Retail Sales are 3% above last year. I don't believe it and you shouldn't either. Many I have spoken to have cut back significantly on their purchases and I even saw reported that the wealthy have also cut back in expensive items. So, believe a 3% gain in Retail Sales at your own peril.
For example, as the market was rising I kept riding my ETF Ultra Pro shares of SSO until on Friday I sold them. At the same time Friday, the value of the ETF Ultra Short shares of SDS had dropped in price to below $90/share so I bought them. If the market goes up additionally in the first few days of this week, I will buy more shares of this at $88 and $86/share if the opportunity arises. I still own my shares of Ford and I see the stock continuing to rise right through the week. I see this stock going to $3-$4 in relatively short timeframe like 2 months. Did you know that 77% of Ford Motor shares are owned by Institutional Investors? So there is money to be made in the markets, but you must do it wisely, never committing cash you don't have to risk. All market "investing" is truly gambling. Any rational human being knows that and, like the Casino's, the game is rigged against the individual in favor of the house. The house here are the big boys who sleep every night because they have significant wealth and influence.
Good luck this coming week.
UPDATE Monday morning 6:45am.
Well the answer is in. Market is down over 300 points in the first 15 minutes of trading. Unrest and comments from China have fueled this early drop, as have comments that shoppers on Black Friday say they are done shopping and have completed their purchases by a whopping 36%. So the season may not be bailed out for Retail sales after all. I said if you believe that we are ahead of last year you do so at your own peril. SDS has risen sharply, up 8 plus points now to $96.35 which I bought for an average price of $89 last week and the SSDO I sold is down to $24.15. Ford continues to rise even with the Dow down 353 now as Ford is currently at $2.84.
Labels: Dow, ETF's, Ford Motor Co., market outlook, Nasdaq, Retail Sales, SP500, Ultra Pro shares, Ultra Short shares, Unemployment for November
posted by Charles Amico at 10:48 AM
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