Monthly Archives: January 2008

A Potential Double

31
Jan 08
Over the past week, we’ve been discussing the likelihood of another rate cut by the Fed during its Open Market Committee meeting this week. Well, we got the 50-basis-point cut in the Fed funds rate yesterday, and the S&P 500 soared over 1368 immediately following the announcement. But the S&P could not hold that gain, and it did not close over 1368. It staged the obligatory retest of 1326 this morning, actually not getting lower than 1334, and then — ka-boom! Over 1368 to close just about at Wednesday’s high. So we have the clear-cut buy signal, and the slingshot...

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Today’s The Day

30
Jan 08
At about 1:45 p.m. EST today the Fed decision will be given to reporters, embargoed for release until 2:15 p.m. But some of those reporters will call a few traders on Wall Street, and we should see stock prices start to move in one direction or another. Then, at 2:15 p.m., the rest of us will find out what happened. The Fed funds rate is about 120 basis points over the two-year Treasury note rate. If the Fed cuts the funds rate by 50 basis points, as they should if they learned their lesson from their last quarter-point cut, the...

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Fat Lady Sings, Bell Rings, Downturn is Over

29
Jan 08
Before the opening on Monday, the S&P 500 futures market followed the Asian markets down, getting as low as 1310 at 1:30 a.m. EST in a test of the 1313 support level. At that point the futures reversed, climbed into the opening of the regular market, and then kept rising to close 46 points higher at 1356.75. This marked a successful test down to lock in the recent rally off the January 23 bottom at 1270.05 (or 1250 in the futures market). Although there always could be one more quick, scary test down to last week’s lows, Monday’s action tells...

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What A Week! What’s Next?

25
Jan 08
Yesterday was a bullish consolidation day for the S&P 500, and today may have been the final test back down to 1326 — it was hard to tell, though. Closing the week over 1326 was important for the weekly chart, and strength from this level on Monday will be a clear sign that the recent decline is over. At the August turn, the S&P closed out the week 75 points off the low, and you saw what happened after that reversal. Well the S&P closed today 60 points off the 1270 low, so this may not be quite as strong...

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A Weebles’ Market

24
Jan 08
It’s been an eventful week for the broad market with some key levels breaking and then being retraced. We’ve covered a lot of this action over the past couple days in Flash Alerts. I’ve especially stressed the importance of keeping a close eye on the crucial 1326 weekly and monthly support level on the S&P 500. In yesterday’s Flash Alert I said that the S&P 500 had to recapture 1326 in order to move us out of the “crash alert” zone. That happened in a most spectacular way, as the S&P first dropped as low as 1270 in a clear...

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So Far, So Good

23
Jan 08
It may surprise you that I liked Tuesday’s stock market pattern, considering that the S&P 500 did not recapture the crucial 1326 weekly and monthly support level. But the week and the month are not over yet, and many of the most memorable lows in stock market history happen with a deep, washout low like we saw yesterday morning, followed by a strong rebound. The S&P 500 was down over 50 points to 1274 about six minutes after the opening, but it got back 35 of those points during the rest of the day. In premarket trading, the S&P futures...

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Crash Alert

22
Jan 08
The Fed FINALLY did something meaningful, cutting the Fed funds rate three-quarters of a point this morning. I often say that the market tries to fool the most people that it can as much of the time as possible, and it may be about to fool me. But the bottom line is this: If after this dramatic Fed move we see one or two more days of high intraday volatility without much change in closing prices, and if the S&P 500 does not bounce sharply back to the 1326 support level and then move easily through it, we will have...

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What an Earnings Season Kickoff

17
Jan 08
Technology earnings season kicked off this week, with a fourth-quarter report out of Intel (INTC) on Tuesday. Last week I predicted that Intel would come out with a good report, and say that chip inventories are normal. And I was right — after the close on Tuesday, Intel did report a good quarter and did say that chip inventories are normal. I expected this announcement to trigger a nice rally, so I also said that if you like to take index options positions, on any S&P 500 close over 1413, that you should buy short-term calls. Unfortunately, the rally never...

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It’s a Correction, Not a Recession

10
Jan 08
This morning, Fed Chairman Ben Bernanke said: “I was wrong. The economy is a lot weaker than I thought. We are way behind the curve in cutting rates, and we’ve put the economy in danger of a recession. We will slash interest rates to catch up with the Treasury market. I take full responsibility, and I resign.” Well, not really, but he came as close as any Fed Chairman has ever come to saying that. Here’s how he actually phrased it: “In light of recent changes in the outlook for and the risks to growth, additional policy easing may well...

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Back Up the Truck

08
Jan 08
Today, Isolagen (ILE) announced that their Chief Executive Officer has resigned, but he will stay on as non-executive Chairman of the Board and a consultant. They then promoted the Chief Operating Officer Declan Daly to CEO. Daly was also the Chief Financial Officer and will continue to act in that capacity until they can find a new one. Moving the COO up to be CEO is not a big deal, especially when the company is moving well along its clinical path for its lead product, the Isolagen Process. The fact that he was also the CFO may have implied to...

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