Wednesday, October 13, 2010

Market comments for Oct. 13th

September Import and Export prices were disclosed a minute ago. Import prices fell -0.6% while Export prices went up +0.3%. In August Import prices were +0.5% while Export prices were up +0.3%. The Futures market has the Dow up about 80 points this morning even before the news. After the news the Dow futures dropped a bit and is now up 68 points.

I was looking at the charts and noticed that the S&P 500 still has room to go up. It is my guess that it could go as high as 1250 before the reversal of the trend comes in to play. It closed yesterday at 1169, so that could still yield a 7% gain form here. Then it will be downhill, as the final head and shoulder pattern of this indicator has been formed. So it appears the conditions are ripe for the final phase of this Bear market rally is about to end. Most likely the timing will be after the election but it could start to unfold even before that. There will be a 3 month period where even if the Democrats lose the majority in the House of Representatives that it would be in Republicans interest to drive the market down while Democrats are still in control. The Republicans could then show how they came in and saved the day in January, when they are sworn in to their new seats, replacing Democrats and Speaker Pelosi. The only problem with this picture is that when the big boys start to sell there is no one to buy the stocks because all will be doing the same thing.

The Dow is within 180 points of the 11,200 level where I said that I had thought the top of this rally was. This is close to the 52 week high of the Dow which went to 11,258 previously.

I got a chart last night from Weiss Research and it was very interesting as you can see below. The number of Bulls is now close to extreme which is often an indicator of a trend reversal is in order. We shall see if this plays out as predicted.

Also of significance today is that Apple stock, symbol AAPL, went over $300/share and in pre-market is at $301,08, up $2.54/share.

And on a special note I am thrilled, along with the people of Chile, for the successful rescuing of its Miners. God bless them all and I hope for them to manage the psychological aftermath now with al the attention they will get. Chile did this rescue right!

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