Daily Report December 15th, 2003
Dear Member,
-Stock Indices: Nasdaq Comp, DJI, S&P500
The Dow and S&P reached new highs while the Nasdaq was still within its trading range but with a close above the 27 and 50 period moving average. The trend is still bullish on Blue Chips whereas the tech sector remains in neutral mode. Saddam Hussein’s capture was perfect timing as indexes were looking for bullish momentum to continue their rallies. The Bush administration could not have imagined a better gift for Christmas. These guys are real good, so are their analysts!!!
The coming Christmas holiday period will be crucial. Saddam Hussein’s capture does not change neither the security situation of coalition troops in Irak nor the fragile economic environment. The fact that Fed policy continues unchanged prooves it. Saddam’s capture will be the spark that provokes the stock market to rally during the remaining weeks of 2003, a sort of capitulation of sellers, taking the shape of a short squeeze. We expect a last period of euphoria before reaching significant resistances followed by a correction. This spark must allow a minimum 200 points rise on the Dow, 20 points on the S&P, and a new high on the Nasdaq. This wave up must last until the end of 2003 towards mid term targets at 2050/2080 Nasdaq, 1100 S&P500 and 10400 Dow or even 1150 S&P et 10700 Dow. The Nasdaq should not exceed 2100.
Whatever happens, this rise is only good for short term trading. It’s too late to engage new mid term long positions, especially when we talk about U.S stocks. We are experiencing a last wave up on the U.S indexes. We expect a bounce on U.S currency since a bullish divergence has been shaping. The resumption of the bear trend will be confirmed once a close at 89.45 is completed on the Dollar index. A first target for the bounce is 94.00/94.15 . This bounce should also confirm the last leg up on the U.S indexes which rose while the U.S currency was down.
In the short term, a first resistance of 1080 S&P, 10145 Dow and 1975 Nasdaq will quickly be reached. A close above these levels will confirm the spike. It’s difficult to predict its upside potential as a short squeeze can take place. We have to keep in mind that there may be a top around 1100/1175 S&P, 10145/10700 Dow and 2050/2080 Nasdaq. These points correspond to former highs reached on March 2002, so it’s unlikely for the markets to break above these strong resistance points without any consolidation. Thus this move lends itself once again to short term trading.
A word on Oil. On Friday, the technical outlook was bullish with a major and perfect upside breakout above 33.00. However given recent events in Iraq and the OPEC status quo, we’ll wait and see how the market behaves before we follow with our bullish scenario. The risk is of course a false break.
Regardless of the likely euphoria on markets, traders will be watching economic figures and companies’ earnings closely this week. Today,it will be important to pay attention to the Empire State Manufacturing Index at 8.30 and the real estate index NABH index at 1.00 p.m. Later this week, house sales, industrial production before the advanced indicators and the widely anticipated Philadelphia Fed index on Thursday, will be the news to follow.
Résistances Short term
Nasdaq: 1960, 1974, 2000, 2050, 2080, 2100
S&P500: 1080, 1088, 1100, 1127, 1135, 1150
Dow: 10145, 10250, 10350, 10400, 10675
Supports Short term
Nasdaq: 1930, 1913, 1905, 1880
S&P500: 1065, 1054, 1039, 1035, 1024
Dow: 9954, 9925, 9900, 9854,9840
Have a nice day,
Jean M Bourgineau |
