S&P 500 Index Analysis

Dec. 6, 2010

Analysis:

Friday's Analysis predicted that there will be "little room for further weakening of the dollar." Today the Euro weakened against the dollar, driving down the market to finish slightly lower. Looking ahead to tomorrow, the market will again focus on Europe's debt problems while there is no bullish news to propel the market higher. As a result, the market will drop below 1,217.

Strategy:

Hold short at 1,217
 
Dec. 7, 2010

Analysis:

Today the market exhibited the classic pattern of a short-term top, as it opened higher and stayed elevated throughout the day, but only to close flat. Commodity markets do not bode well for the Bulls, either. Crude oil failed to break the key $90 resistance, while gold price action formed a double-top pattern. Euro's rally into $1.34 was apparently sold into by the Bears to finish above $1.32. Looking ahead to tomorrow, the driver of the market will be the failure of the European finance ministers to reach an agreement to comprehensively deal with Portuguese and Spanish sovereign debts. As a result, the sinking Euro along with the rising T-note rate will drag down the market to below 1,217.

Strategy:

Hold short at 1,217
 
Dec. 8, 2010

Analysis:

Today the market dropped only to 1,219 before bouncing back to finish higher with no market-driving news. Looking ahead to tomorrow, the Initial Jobless Claims will hover around 430,000. The market will trade in a range as its breakaway from 1,228 is checked by lingering concerns about European economic strength and China's imminent tightening of monetary policy on Friday. The longer the market fails to break away from 1,228, the more violent the downward reaction will become.

Strategy:

Hold short at 1,217
 
Quote from DrChen:

Dec. 8, 2010

Analysis:

Today the market dropped only to 1,219 before bouncing back to finish higher with no market-driving news. Looking ahead to tomorrow, the Initial Jobless Claims will hover around 430,000. The market will trade in a range as its breakaway from 1,228 is checked by lingering concerns about European economic strength and China's imminent tightening of monetary policy on Friday. The longer the market fails to break away from 1,228, the more violent the downward reaction will become.

Strategy:

Hold short at 1,217
More...

Couldn't disagree more. There is a lot of significant bullish news on the wires tonight. The strength the market showed today in the face of some early selling pressure is also very bullish.

My prediction is we complete the start of the breakout move from Monday morning and set new highs. Shorts may be squeezed out as we begin the Xmas rally in earnest ( Monday the head fake was mostly premarket and had little effect on short holders ).

Recommend cover your short unless Jobless Claims trigger a negative move premarket. My call is off if this occurs.

Sure, anything is possible, but in your analysis of the last two days you are ignoring significant news items that can move the market. Drops in metal stocks actually camaflauged the overall strength in the market. But when you think of it carefully, Gold usually drops when market participants have lowered their fear about the world economy.

I'm ready for any eventuality but I think the bull market reasserts itself the rest of this week. Good luck.
 
Quote from DrChen:

Dec. 8, 2010

Analysis:

Today the market dropped only to 1,219 before bouncing back to finish higher with no market-driving news...
More...

Hi DrChen,

I don't know what news source you're using but there was a 1030am est EIA Petroleum Status Report. This report is very important to the price movement of the S&P 500 Emini ES futures and provides a wealth of clues about any changes in supply/demand. I usually give a 15 min window for looking for change in supply/demand after any regular schedule market event and will look for a faster change if the event has been hyped by the analysts or financial networks for several days before the release.

My point is the market does not ignore this key regular schedule news event...you should add it to your list of key events to monitor.

Mark
 
For the complete tools who think that this thread has any predictive value, here is a breaking news:

Nobody can predict the job numbers. And for extra fun, sometimes the market reacts to those numbers in an unexpected fashion. So even when you get it right, you still can be surprized...

What did the good doctor do last Friday? He was expecting 150K new jobs and we got less than third of that. In the ensuing selloff he quickly switched to short, and as a result he got stuck in a losing position. Why? Because he was trying to daytrade on daily news fluctuations, instead of sticking to swingtrading.

Had he stayed in the long position, he would be back finally in the green.

The only analysis one needed to know in the last 4 months: Quantitative easing equals weaker dollar thus higher stockmarket. Buy any dip or just stay long. Once the doctor switched to long, he actually started to make profits.

That's it. There is simply no point in analyzing daily when you play longer term.
The good doctor is very inconsistent in both, predictions and trading and the 2 have nothing to do with each other in this thread anyway.

But again, we have to admire his stamina and endurance...After about 100 days he is only down -18 pts, adorable.

Constructive Critic out.... :)
 
Mark,

Thank you for your comment. In a day when no economic news occurs, I will consider the "EIA Petroleum Status Report" as a market-moving event in the future.

Dr. Chen
 
Dec. 9, 2010

Analysis:

Yesterday's Analysis predicted that "the market will trade in a range as its breakaway from 1,228 is checked by lingering concerns about European economic strength and China's imminent tightening of monetary policy." Today the market traded in an eight-point range and settled higher. Looking ahead to tomorrow, the International Trade deficit will widen to $45 billion, caused by rising consumer demand and higher crude oil prices, and Consumer Sentiment will drop to 71 due to continued slump in home values. China's central bank will increase interest rate in the next seven hours in an attempt to curb rising inflation, which event the market has not fully discounted. As a result, the market will retreat while the dollar continues to strengthen against the Euro.

Strategy:

Hold short at 1,217
 
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