Market Outlook for Feb. 19th, 2009 to week's end: Holding above Nov. lows!
Well we did not do badly Wednesday in the market, all things considered from Tuesday's abysmal showing. Today the Dow hit a low of 7451, which is ever closer to the previous November low of 7,392. The S&P closed Wednesday at 788 but did have a low for the day of 780. Looking at the charts on both indexes it looks very much like we are in the process of retesting the low of 7,392 on the Dow this week. It may only be a brief moment but my sense is that we will bounce back up off the bottom if we do touch it. The S&P 500 is a different story as we are still about 40 points above the November lows of 741, and we would have to have a more drastic drop in the S&P to get there than the Dow, which seems unlikely. So the Index to watch will be the Dow for the retest.
Friday is what they refer to as Double Witching fro Options expiration. Usually that means increased volatility. Volatility as measured by the VIX index today actually went down slightly from yesterday closing at 48.46. However on Tuesday it leaped up touching 50 before backing off to close at 48.66. While it is over the 20 and 40 Day Moving Average, it most likely does not look like it will go to the highs back in November when the market hit its lows. back then the VX hit between 70 and 80. Based upon this fact alone I do not see us in for a meltdown this week. I do see instead an opportunity to take some risk and buy some stocks as the market will have a rally most likely next week.
Supporting evidence to me are several stocks. Apple, symbol AAPL is still above its 20, 40 and 60 day Moving averages and no where near the lows. Another indicator is the Nasdaq closed at 1468 which is well above the November lows of 1295. In conclusion, this week is a buying opportunity and as I said earlier in another post 3 weeks from now many are going to kick themselves for not getting back into the market. Some I own and like are TNA, SSO, AAPL. I think you will see Gold and other precious metals like Silver drop, as World markets reflect our move up.
UPDATE: 6:00am PST
Weekly Jobless claims were up only 8,000 keeping Weekly Claims at 627,000 jobs lost. Continuing Claims reached 4.99 Million jobs lost. The CPI was up 0.8% and the Core inflation rate was up a surprising 0.4%.
Friday is what they refer to as Double Witching fro Options expiration. Usually that means increased volatility. Volatility as measured by the VIX index today actually went down slightly from yesterday closing at 48.46. However on Tuesday it leaped up touching 50 before backing off to close at 48.66. While it is over the 20 and 40 Day Moving Average, it most likely does not look like it will go to the highs back in November when the market hit its lows. back then the VX hit between 70 and 80. Based upon this fact alone I do not see us in for a meltdown this week. I do see instead an opportunity to take some risk and buy some stocks as the market will have a rally most likely next week.
Supporting evidence to me are several stocks. Apple, symbol AAPL is still above its 20, 40 and 60 day Moving averages and no where near the lows. Another indicator is the Nasdaq closed at 1468 which is well above the November lows of 1295. In conclusion, this week is a buying opportunity and as I said earlier in another post 3 weeks from now many are going to kick themselves for not getting back into the market. Some I own and like are TNA, SSO, AAPL. I think you will see Gold and other precious metals like Silver drop, as World markets reflect our move up.
UPDATE: 6:00am PST
Weekly Jobless claims were up only 8,000 keeping Weekly Claims at 627,000 jobs lost. Continuing Claims reached 4.99 Million jobs lost. The CPI was up 0.8% and the Core inflation rate was up a surprising 0.4%.
Labels: AAPL, Double Witching, Dow, Options expiration, rally, SP500, SSO, TNA, VIX, Volatility
posted by Charles Amico at 8:25 PM
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