Market comments for Oct. 12th, 2011, Columbus day

Say what you like about this rally, it has surprised everyone, including me. I had to look at the chart this morning to see just how high it has climbed back up from the bottom and to see whether I think it will hold. The chart below shows it was a rise of about 8% in 7 trading days. However, when I look at the very low and dropping volume, I am very suspicious of this rally and it appears to me to be a another bear trap. Here's the chart. You decide!

Explaining the unexplainable.

Market doesn't make sense until you realize it is just a casino for business people. Earlier this week the stock market in the US rallied as all Indexes climbed up from the lows of a week ago in anticipation of Ben Bernanke's speech this morning. Most talking heads on CNBC and other business news outlets suggested the market rise was because Bernanke was going to announce QE3. Then yesterday they questioned if the markets weren't setting themselves up for a big disappointment if Bernanke didn't announce QE3. Well today we got the answer. He didn't even mention QE3 or Quantitative Easing as a possibility. How have the markets responded so far? You guessed it, there is a big rally. The Dow is up 170 points right now after being down over 200. That's almost a 400 point swing.

Anyone who thinks they know how to explain these moves as rational, is crazy. Europe still has massive problems and yesterday's action in the DAX the past 2 days is worry-some to sober rationalists.

Now some are suggesting the rally is because of the Hurricane Irene. They suggest the purchasing of batteries and emergency supplies will help the economy. My God, are they suggesting we just need a disaster to solve our economic problems. We don't really have the money to repair whatever gets damaged from this storm.

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%.

Today's market comments

Well day 1 of the week did reaffirm my expectation. The Dow closed today at 8693, down 177 points. It was down lower today but recovered. The dow was down over 276 points at the low of the day. There isn't much good news in the economy, so sell into any rally's. The interesting thing is that if we could get this over and go down as I think we need to, we could rebound and be on our way back up. But the market won't be rushed. It was another day when the Dow was below its 20 day Moving Average.