Pre market outlook for May 19, 2009: Cautious
The big news this morning was Housing Starts for April coming in at record lows and new Building Permits as well. The Futures were all showing today was going to be an up day until this news came out. Also, Home Depot beat analysts expectations on their earnings reported for the quarter, but they got there by closing stores, laying off people and cutting other costs. You can't cut your way to growth. You either have it or you don't. Revenues for Home Depot were down 10% and that is the real story in my view.
I was asked by a friend where the market was going as it has been still pointing to a continued uptrend as yesterday's market action was green in all Indexes. I said to my friend this was true but Volume was pathetic. Art Cashin on CNBC this morning also commented on this. He said that people he talks to are very divided on the direction of the market. He said about half believe this is going to continue while the other half believe not only are we going lower but they believe we will test the previous lows of 6,400 but may go lower.
I continue to use the 200 Day Moving Average as my major indicator right now as we are still below it on the Dow and S&P 500, but not on the Nasdaq. The Dow 200 day Moving average line crosses the axis now at 8,900. On the S&P 500, it crosses the axis at 942. The Nasdaq is slightly above its 200 day Moving average which crosses the axis at 1,725. We had closed yesterday at 1732. Watch this index pull back today or the next day or so and will be the clue that we will not go above the 200 day Moving Averages any time soon and it means we are closer to a pullback and correction!
One last thing Art Cashin said this morning and has been going on in my thoughts as well but hadn't heard it put that way of clarity until now. He said, There are a lot of cross currents going on right now and something, in essence, seems fishy. I have felt this too.
The market feels like it is being heavily manipulated to show an uptrend, as Volume is low. The only reason I can think of why this is going on is to try to build confidence by the public in the markets again. If this is what is going on, they should stop it as no one believes this stuff and it feels like a setup to get others to invest their remaining cash so someone can take it away again. Many of us don't believe this market rally is nothing more than a Bear market rally. There really isn't any good news out there yet.
The Put to Call ratio stays in a tight low range and closed yesterday at 0.78 while the VIX Index at 30.24 by days end. And not unrelated, Tim Geithner warned us yesterday of higher unemployment to come and more bad days ahead. As long as people are fearful of losing their jobs there will not be a recovery.
I was asked by a friend where the market was going as it has been still pointing to a continued uptrend as yesterday's market action was green in all Indexes. I said to my friend this was true but Volume was pathetic. Art Cashin on CNBC this morning also commented on this. He said that people he talks to are very divided on the direction of the market. He said about half believe this is going to continue while the other half believe not only are we going lower but they believe we will test the previous lows of 6,400 but may go lower.
I continue to use the 200 Day Moving Average as my major indicator right now as we are still below it on the Dow and S&P 500, but not on the Nasdaq. The Dow 200 day Moving average line crosses the axis now at 8,900. On the S&P 500, it crosses the axis at 942. The Nasdaq is slightly above its 200 day Moving average which crosses the axis at 1,725. We had closed yesterday at 1732. Watch this index pull back today or the next day or so and will be the clue that we will not go above the 200 day Moving Averages any time soon and it means we are closer to a pullback and correction!
One last thing Art Cashin said this morning and has been going on in my thoughts as well but hadn't heard it put that way of clarity until now. He said, There are a lot of cross currents going on right now and something, in essence, seems fishy. I have felt this too.
The market feels like it is being heavily manipulated to show an uptrend, as Volume is low. The only reason I can think of why this is going on is to try to build confidence by the public in the markets again. If this is what is going on, they should stop it as no one believes this stuff and it feels like a setup to get others to invest their remaining cash so someone can take it away again. Many of us don't believe this market rally is nothing more than a Bear market rally. There really isn't any good news out there yet.
The Put to Call ratio stays in a tight low range and closed yesterday at 0.78 while the VIX Index at 30.24 by days end. And not unrelated, Tim Geithner warned us yesterday of higher unemployment to come and more bad days ahead. As long as people are fearful of losing their jobs there will not be a recovery.
Labels: 200 day Moving Average, Art Cashin, Dow, manipulated market, Nasdaq, Put To Call ratio, retest lows, SP500, Tim Geithner, Volume
posted by Charles Amico at 6:06 AM
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