INDEX UPDATE
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Last Friday the DOW closed at 8906 and so far we are still below it, so for this week so far we are slightly down, although the HiTECHs are up for the week.
So far this week we had 2 dips in the DOW, one on TUE and one yesterday. It may not seem much, but this is the first time since this rally started that we had 2 100 point intraday dips. These mini-dips are occuring more frequently starting about 2 weeks ago and for this week we had 2 of them in 3 days.
This morning again, CNBC mentioned that there is talk on the trading floor that the bias may be changing towards the possibility of the FED increasing rates. Whether that is true or not in the future, just the fear of that could hurt.
The interest rates jumped substantially yesterday, and if it continues we could hit the 6.15% level by the 2nd week of April, as previously mentioned. Watch those interest rates, since that could be the key to bring this market down, at least for the short-term. Yes I realise that many are saying that interest rates will drop to the 5-5.5% range, but if you check the charts, it is a very clear upward trading chaannel with higher highs and higher lows. Maybe the interest rates will drop but for the immediate short-term its heading up.
For the overall market the short-term technicals are still showing a bias to the downside for today. In the recent past these 2nd day bias to the downside did not work. If the market is weak today, or at least flat then that would be a another indication that normality is starting to return.
The ADVANCE/DECLINE and the NEW HIGH/NEW LOW analysis is still showing further movement up, but that is more for the mid/longer-term.
The quarter will be ending in 4 days, so the mutual funds have their deadline. I am not sure how that works exactly, so if anyone can help.
If there is a futher dip this week, this may help the month end/quarter end rally which will send the market up starting next Monday for most of the week. That should be the interim top of this rally and weakness should increase. Then the actual earnings and interest rates and liquidity will determine further direction of the market.
For the longer term could this rally be similar to that of 1996 where the top occured in MAY. That was the year that money was rotating into the small/micro caps with strength, and with this rally there are also signs of such.
Seeya |
