Market Outlook
(Archive)
5 days delay
In order to have access to the most recent market
commentaries you have to become a member.
- Learn Definitions used in our Market Outlook.
- Market Outlook Archive is updated on a daily
basis.
|
Market Stage
(8/22/2008) In Thursday's MO we thought that 'The advancing SBV would point to higher odds of recovery.' The result of today's session was a strong recovery.
In terms of the 60-day SBV(20 period) chart, it shows an advancing NASDAQ 100 SBV oscillator while the oscillators of both the S&P 500 and DJI SBV have flattened out after advancing strongly. The values at the end of the session read: minus 1% on the NASDAQ 100, plus 34% on the S&P 500 and plus 23% on the DJI. The advancing SBV would point to the better odds for the further recovery.
In terms of our longer term 1.5-year SBV(10 period) chart, we are still showing a declining SBV oscillator. However, by comparing the recent selling volume accumulated to the huge buying volume surges in June-July 2008 we would assume that the odds are on the side of mid-term up-trend. Given the two conflicting bits of information we can say that it is unclear whether the recovery is long lasting however the market is still in a precarious area.
Market Status
(8/22/2008)
Market Performance:
| | Last | Change | Volume | | S&P 500 | 1,292.20 |  | 14.48 (1.13%) |
| 2,964,197 k | | NASDAQ 100 | 1,931.47 | | | 24.73 (1.30%) |
| 600,345 k | | DJI | 11,628.06 | | | 197.85 (1.73%) |
| 568,536 k |
In light volume conditions, today's trading concluded strongly. The NASDAQ 100 moved ahead 1.3%, the S&P 500 added 1.13%, and while the Dow was strongest, gaining 1.73%. However as strong as today's activities are, the week ended in the red: the NASDAQ 100 is down 1.33%, the S&P 500 lost 0.46%, and the Dow is close to neutral lower by only 0.27%.
The last few sessions have seen unusually low volume. Today saw 2,964 million shares traded today on the S&P 500, less than the daily average volume of the past 3 months by 24%.
NASDAQ 100 - 8/22/2008.
1-day Intraday, Modulated Volume.
Volume Analysis:
9:30 - 11:00 Today's open was somewhat higher than yesterday's close. The NASDAQ 100 was higher than the close and continued to move that way. At around 10:00 am the index retreated slightly lower and created a buying surge (a buying surge is a spike in the volume moving average that appears in the index volume pane and is accompanied by green - denoting buying volume - on the SBV oscillator pane) as it moved down. The effect of this surge was to add more positive stimulus to the index.
11:00 - 12:00 In this time period, the index retraced from its earlier movement higher, this time large surges of buying volume were clearly produced in abundance. While the declines in this short time period were quite hefty, because the index was still strongly positive, the buying surges strongly affected the trend and caused it to make a trend change.
12:00 - 16:00 Already trading positively, the formation of the buying volume caused the index to move higher. Today's session was one of those days where the trend was in one direction and the market continued along that direction. The afternoon generated surges of selling volume but all things considered today's trading activities produced a mixed amount of both types of volume.
Short Term (lasts a few hours to a few days): In yesterday's short term we had predicted that: 'the most probable scenario plays out, then further declines may be sustained tomorrow. However, it may continue to move in a moderate fashion to the upside for some more time.' In today's trading, it was obviously not the case, the trend was higher and very much higher in this case. Our rational for this outlook is the weakness exhibited at the beginning of the week and the low volume conditions of recent sessions. Usually there is a trend and then under lower volume conditions the trend will continue. However, in this case the markets have continued to rebound after some strength was shown yesterday.
The short term outlook has begun to show some strength. Monday's open should probably be the weakest part of the day due to the moderate amount of selling volume added at the tail of today's session. However, from there the indexes should probably move up slightly. There remains an excess amount of buying volume generated during the last several sessions and that should propel the index higher.
Analyst's Daily Tip:
Delayed volume reaction
It is important to note that when a significant volume surge appears, an index will not always change its direction immediately. Quite frequently, the index will continue further along its prevailing trend, and in doing so, accumulate more and more Buying Volume or Selling Volume, as the case may be. For example, when an index is moving up and generating further Selling Volume as it continues its uptrend, the total accumulated Selling Volume grows (is ‘collected’). The greater the amount of Selling Volume that builds up over time, the longer and stronger we can anticipate the coming trend reversal to be.
Charts: Changing Default Chart Settings
You can modify and save your personal default chart settings. This way, the next time you open a chart, it will load with your favorite settings. In the `Tools` menu, select the `Set Defaults` option. This will redirect you to the `Chart Defaults` page on our web site.
Financial Press Overview:
Ending a moderately low week, the markets posted some nice gains. Today's news centered around lowering oil prices and some remarks from Fed Chairman Ben Bernanke.
Light sweet crude on the NY Merc fell $6.59 or 5.43 percent to settle at $114.59 a barrel. The drop was the largest single day drop since Dec. 27, 2004 when crude dropped 6.47 percent. The move down reaffirms the belief that a softening global economy is lowering demands for fossil fuels.
At the Kansas City Fed's annual economic symposium, Chairman Ben Bernanke said that inflation pressures should moderate this year and economic growth should moderate. He added that inflation forecasting remains 'highly uncertain'. Most investors see inflation as the greatest risk to the US economy and to have the Fed say that inflation will moderate is very relieving.
Key economic data for the week starting August 25th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Monday: |  | 10:00 Existing Home Sales Jul 4.90M 4.86M |
| Tuesday: | | 10:00 Consumer Confidence Aug 53.0 51.9
10:00 New Home Sales Jul 523K 530K
14:00 FOMC Minutes Aug 5 |
| Wednesday: | | 08:30 Durable Orders Jul 0.1% 0.8%
10:35 Crude Inventories 08/23 NA 9390K |
| Thursday: | | 08:30 Initial Claims 08/23 NA 432K |
| Friday: | | 09:45 Chicago PMI Aug 49.9 50.8
10:00 Mich Sentiment-Rev. Aug 62.3 NA |
|
|
@Index-Day-Trading |
|
|
Important: If you trade options, we recommend you invest only a small portion of your assets - an amount that will fit your personal trading needs and risk tolerance. In our opinion, that amount should be about 10% of your total portfolio; it should never exceed 30%. |
|
|