World Markets Mixed; U.S. Beginning of Recession Stagnation?

Yesterday, the rally train looked like it ran out of steam, and I made some predictions as to what the market results for Monday meant. I will discuss these in a little bit. But first, the market results.

The Nikkei put in solid gains today, while the rest of Asia swallowed modest losses. Europe continued that sentiment with losses for their major three indecies. The U.S., on the other hand, after a slow and mixed start attempted to swallow up all the losses that were put in yesterday.

By mid-day all indecies put in a solid gain of at least 1%. At the closing bell all three indecies recorded more than 2% in gains. This was on news that construction of new homes are starting to go up and so are the wholesale prices, as well as the continued exercise by the Obama administration and the Treasury to stop and retrieve the money that AIG paid out in bonuses to members of the division that caused AIG to stumble.

Asia:
Nikkei => 7,949.13, +244.98, +3.18%
Hang Seng => 12,878.09, -98.62, -0.76%
Straits Times => 1,559.03, -27.29, -1.72%

Europe:
FTSE => 3,857.10, -6.89, -0.18%
DAX => 3,987.77, -56.77, -1.40%
CAC => 2,767.28, -24.38, -0.87%

U.S.:
Dow => 7,395.70, +178.73, +2.48%
Nasdaq => 1,462.11, +58.09, +4.14%
S&P => 778.11, +24.22 +3.21%

Me:
AMD => 2.76, +0.28
F => 2.28, +0.18
FPL DI => 3.81, +0.21
NG => 2.25, -0.15

Yesterdays opinion included a probability spread about what the market would do today. In that prediction I said:

I predict a 10% chance of a big rally, 30% chance of stagnant movement, but a 60% chance of the bears taking over.

I should probably supply some detail about how I came up with my percentages, and I think I will, just not today. To keep it simple I will say this much; a third is the chart performance, a third are the indicators, and a third is the news. Since, the news yesterday was primarily about the AIG bonuses, I allowed it to carry over to the bear side of my analysis. I also allow up to 10% for the occasional anomaly. Something that has become more common in these economic times.

So what did the market do today? It ran stagnant. How can I say that? The news produced today was only enough to swing the prediction about 20% toward stagnation. This is because it did not create a significant change of opinion to cause it to advance significantly above highs of yesterday.

The fact that there was good economic news in regards to home building and wholesale goods is promising. However, there was still the occasional layoff report such as the laying off of 2,454 workers in 3 states by Caterpiller. Those, fortunately, are becoming less frequent. It is logical to say that the bear is wounded but not dead, yet.

So what am I predicting for tomorrow? Well my opinion is still bearish for the general market. See the bullet points I provided in Day Five of the Bull? for my reasons why. I do also have something to add. It is my opinion that we may start seeing the market creating a base, and it may be relatively "thick". What I mean by "thick" should become apparent as I give you my numbers.

For at least the next three to six months, I see the Dow bouncing between 6500 and 7500, the Nasdaq between 1250 and 1450, and the S&P between 650 and 800. These numbers are the most recent support and resistance levels that they have encountered. Considering all the world news and the increasing positive tone, these seem to be most logical to me. The prefect place for day- and swing-traders to play.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

Day Five of the Bull?

The markets go for a fifth day of gains. But were they able to make it? The Asian markets start off with mixed gains but up in the green. Europe continues the rally making solid gains in all indecies. But as for the U.S., it looks like the train just ran out of steam.

Despite week economic news and the report that AIG is giving out bonuses with tax payer money, the U.S. indecies marched upwards. However, that was short lived. As of the closing bell, all indecies ended negative.

Standing news is that President Obama has ordered that every legal avenue be explored to block the AIG bonuses.

Asia:
Nikkei => 7,704.15, +134.87, +1.78%
Hang Seng => 12,976.71, +450.91, +3.60%
Straits Times => 1,586.32, +8.80, +0.56%

Europe:
FTSE => 3,863.99, +110.31, +2.94%
DAX => 4,044.54, +90.94, +2.30%
CAC => 2,791.66, +86.03, +3.18%

US:
Dow => 7,216.97, -7.01, -0.10%
Nasdaq => 1,404.02, -27.48, -1.92%
S&P => 753.89, -2.66, -0.35%

Me:
AMD => 2.48, -0.04
F => 2.10, -0.09
NG => 2.40, -0.06
FPL DI => 3.60, +1.16

Looking into the technicals of this rally, it looks like the bull is about to be slaughtered by the bear. And here are the reasons why.

• We had 4 full days of overall gains in the U.S. market.
• The Dow has put in what appears to be a grave stone doji,
• The S&P is more of an inverted hammer (but it might as well be a grave stone), and
• The Nasdaq put in a solid bullish engulfing.
• None of the indices broke above the 50 point threshold of the RSI indicator.
• We have the stochastics and MACD of all three indices approaching oversold levels, plus the MACD is under the zero line as it has been the entire rally. So if you are not in the market now, it's too late anyway.

What is the market going to do tomorrow. I predict a 10% chance of a big rally, 30% chance of stagnant movement, but a 60% chance of the bears taking over. Time for me to analyze and put in a few put plays for the coming week.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.