Thursday, May 8, 2008

No Biggie: Market Up, But Bearish Trend in Place

Thursday, the major indices regained some of the losses incurred on Wednesday, but not nearly enough to reverse the trend begun this final true week of earnings releases.

On Friday of last week, the Dow closed at 13,058.20. Believe it or not, that was the high point close of the year - all of 2008 - for that index. Still it was 206 points below the close on December 31, 2007. The Dow is down roughly 200 points this week and all of the indices are looking... well, dicey.

At the moment, there isn't enough good news to move forward and there's somewhat of a lull in the bad news cycle, so stocks are somewhat stuck in neutral on a bit of a downslope. Thus, it's beginning to roll backwards.

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Chartwise, the bearish turn which began in August of last year, but ultimately defined itself with October and December tops and November, January and March bottoms, is still intact.

Today was really a dead cat bounce off yesterday's collapse. The cat bounced, but not very high, and was quickly devoured by a large, hungry bear. The upside is limited, for now, while the downside appears to be the path of least resistance with plenty of reasonable support points, but nothing solid all the way back to 11,700.

The Dow, S&P, NASDAQ and NYSE Comp. all touched the top of their downside trendlines last week and have pulled back into the channel.

Dow 12,866.78 +52.43; NASDAQ 2,451.24 +12.75; S&P 500 1,397.68 +5.11; NYSE Composite 9,388.54 +49.07

Gainers eked out a minor victory over losing issues, 3428-2730. New lows expanded their advantage over new highs, 219-126. Once again, the new lows - new highs differential is emerging as a leading indicator, suggesting a new wave of selling.

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Oil cooled off just a bit, but not enough to make another record high. Crude closed up 16 cents, at $123.69 per barrel on the NY Mercantile Exchange. The metals gained, with gold up $10.90, to $882.10. Silver was up 18 cents to close at $16.87 per ounce.

Looking ahead to Friday, unless the Dow rallies 200 points, it will close the week lower, breaking a string of 3 straight gaining weeks, and gains in 6 of the last 8. Momentum has clearly swung to the bearish outlook.

NYSE Volume 3,769,296,750
NASDAQ Volume 2,092,502,125

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