Markets Overview

By: Angelo Campione | Sun, Sep 28, 2008
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9/28/2008 6:56:51 PM

Index Reviews for September 26, 2008

Here's an overall review of the various major markets. This analysis has a medium term outlook. Note, the figures in brackets were the last reported figures on August 22, for comparison purposes.

Index Close Support Resistance Primary Trend 200 DMA
Financials 21.39 (20.64) 19.50 23.00 Down 23.83

The Financials are have been moving in a large range bound pattern, things seem uncertain going forward. We're either forming a bottom or we're getting set for another move lower.

Index Close Support Resistance Primary Trend 200 DMA
S&P 500 1213 (1292) 1170 1300 Down 1329

While the S&P is in a downtrend, it too is showing signs of uncertainty, it could easily go higher from here or continue to drop. If 1260 is surpassed, 1300 - 1320 becomes the target in the medium term. On the downside, a break below 1170 will take us down to the 1120 region.

Index Close Support Resistance Primary Trend 200 DMA
Nasdaq 100 1672 (1931) 1600 1800 Down 1861

The Nasdaq finally rolled over this past month to fall in line with the majors and is also in a position to move higher, although we may fall a little further before the rebound happens.

Index Close Support Resistance Primary Trend 200 DMA
Dow Jones 11143 (11628) 10750 11800 Down 12101

The Dow is in essentially the same position as the S&P. If 11400 can be surpassed, 11800 - 12000 becomes the target

Index Close Support Resistance Primary Trend 200 DMA
Russell 2000 705 (737) 660 760 Side 712

The Russell is caught in a large trading range that started in January this year and spans from approx 660 to 760. At this point we may see a dip down to 660 before rebounding.

Index Close Support Resistance Primary Trend 200 DMA
Volatility (VIX) 34.74 (18.81) 27.50 37.50 Up 23.71

The VIX is overbought at this point (and it can also stay this way for a while), although it may be indicating that a turn higher in stocks is not far away.

Index Close Support Resistance Primary Trend 200 DMA
US Dollar 76.99 (76.81) 75.00 80.00 Side 74.36

The parabolic move in the dollar peaked at around 80 this past month and now looks to be taking a breather down to the 74 - 75 region.

Index Close Support Resistance Primary Trend 200 DMA
Gold 888 (823) 850 950 Side 899

In the last 2 weeks gold has come back to life and could now trade in a range between $850 - $950.

Index Close Support Resistance Primary Trend 200 DMA
Crude Oil 107 (114) 90 120 Down/Side 113

Oil found support around $90 and rebounded strongly, we're likely to see oil trade sideways for the time being.

Index Close Support Resistance Primary Trend 200 DMA
CRB 364 (395) 340 400 Down/Side 403

The CRB index is essentially in the same position as oil and is rebounding from oversold.

Index Close Support Resistance Primary Trend 200 DMA
Bonds (TLT) 94.50 (93.08) 93.00 97.00 Up 92.41

Bonds are taking a breather at this point but are firmly in uptrend. This is consistent with the notion that money flows out of the market and into bonds.

Index Close
Put/Call Ratio 1.01 (0.88)

Looking at history, when the ratio of put options to call options is around 0.70 it indicates a short-term top, whereas a figure of around 1.50 indicates a short term bottom. The current figure of 1.01 is in the normal trading range, although th previous week we saw a reading close to 1.50, which was an extreme (note, this ratio can change very quickly so this is mainly useful when you see an extreme in the ratio).

SUMMARY

Overall the markets are mixed which is consistent with the uncertainty around the "bailout" package. We seem to be at a pivotal moment in time, where the decision that's made by the government will be the catalyst in the near term.

The conclusion is that short term, we may get a push higher in stocks but the medium term remains uneasy.

 


 

Angelo Campione

Author: Angelo Campione

Angelo Campione
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