As most of you folks know, I use the daily charts most of the time because they are very useful for short term trading. When looking at the intermediate time frame, the weekly charts provide a better picture of what's going on.
Here's the weekly chart for the NASDAQ:
stockcharts.com[h,a]weclyimy[pb20!b10!f][vc60][iut!Ub14!Lc5!Lj[$spx]]
The NASDAQ has NOT reached oversold levels yet. The candlestick patterns indicate we should see more downside in the intermediate time frame. It looks as though we will go lower than the April low.
In looking at the weekly chart for the Dow, those long red candles look incredibly ominous. I think we should expect to see a new low on the Dow as well.
stockcharts.com[h,a]weclyimy[pb20!b10!f][vc60][iut!Ub14!Lc5!Lj[$spx]]
In my very humble opinion, we ain't seen nuthin yet. I'm already hearing of people with 401K's going to all cash within their portfolio. I know it's nuts, but people are scared. As the upcoming earnings season disappoints yet again, and year end performance numbers come out for the funds, I think you're going to see a lot of individual investors cashing in their chips and going to cash and maybe bonds.
Mutual Funds aren't done selling because the redemptions haven't really got underway yet. When redemptions come in, even the performers will be sold.
The employment numbers have scared people who normally don't pay attention to these sort of things. The Secretary of Labor was on CNBC yesterday and she stated the numbers caught the administration by surprise. What does this do to consumer confidence?
I know several people in management positions in the retail business. They're telling me stores aren't ordering their usual inventories for Christmas. Stores are cutting back.
The average investor still remembers all the hype about a second half recovery and now they're seeing that it isn't here. I don't think it's prudent to underestimate the power of that perception.
Don't fight the Fed and don't fight the trend. These are two philosophies that are in conflict with each other. So far the trend is winning. If seven rate cuts haven't help turn the economy around, there's no need to expect the eighth will be the magic number.
What happens if next month's employment numbers are worse than this month's numbers? Anyone willing to bet it won't happen? And, don't forget the job bias numbers! When the economy was booming, our government officials stated that there must be at least 125,000 jobs being created that they couldn't account for. The economy was so robust, they knew jobs were being created that they couldn't track. They're still using that bias number as far as I know. And now that the economy has lost it's ooomph, do you think they're using a negative bias number? I didn't think so either.
Well, September is historically one of the worst months for the markets, we're certainly true to form so far.
Stay on your toes, remove the bells, we're not ready to rock and roll to the long side yet.
da-grizzly-bum |
