The Fed this week held rates steady but the news
Friday was a CPI that showed unchanged readings for both
total and core-CPI versus expectations for a 0.2% gain in each
segment. The year-over-year rate in core-CPI dropped a bit to 2.6% from
2.7%. This news to some show that inflation is being kept in
check and the the Fred could cut rates instead of raising them.
Recently we showed how
the foreign markets have done this year. Here is an overly comparing
the S&P 500 to the Dow. Pretty much lock step.
So you see that not all years are big winners for the last two
weeks but I do not think many would want to sell now as with the
4-monts rally too many taxes to pay on all the profits. Better to
wait until after the new year. Then when the new year comes that
selling may be what starts the correction.
The Dow broke out again this week though the volume was
not too heavy. Getting rather far away from the 50-day EMA and the RSI though not above 70, is close. You can see in the past if it
gets
above 70 it eventually pulls back. On Friday there were more
decliners in the NYSE then advancers so this is another sign
of the topping process.
The Dow Utilities made a little double top this week.
S&P 500 I put a Fibonacci overlay on this with the 50%
lined up on the spring high. This makse a reasonable projection of a
top if we do see a continued move.
The long term S&P 500 for the past 15 years shows the bear
market in the first couple of years of this century that dropped it
to the usual 62% retrace. There seems to be a good chance of it
getting back to its old high in 2007 but could use a good pullback
before it does.
The Nasdaq 100 here with the
QQQQ broke above the trend line though closed Friday flat for
the day. You got to figure it will try to break 45 before the new
year comes. It could then draw in sideline cash to start a January
pullback. (meaning suck them it to take away their money)
The Wilshire 5000,chart somewhat similar to the S&P
has made it to the resistance one level down from the all time high.
This looks to be to vertical to break out above 15000 without a retrace in
time and price.
The NASI we showed before how the MACD spikes often proceed
the pullback by a couple of months. In the next week or two we should
see if the trend line holds. If not then a pullback in the Nasdaq is
at hand.
Just pointing out the biotech
sector and how it pulled back to support and the 50-day EMA. In the
past often biotech and tech-tech rally together but this year say
tech stock lagging. Perhaps the release of Windows Vista will start
something going in tech next year.
This chart looks pretty good now but that move
up does not look so sturdy. It did have some backing and filling but
see how different the last 2 months look compared to the decline from
March to August.
We said time to go long the yield and short the bonds. There will be
pullbacks (as shown here with the yield) Now at 50-day resistance
but think we will see it get to the trend line at 4.8% in time then a
break out later in 2007. The CPI core for the year is at 2.6% but
real inflation is closer to 4%. When the rates for 30 years was 4.5%
it seemed a bit nuts to tie up money for 30 years to net 0.5%. If and when
Inflation increases the fed will raise the short term rates and this
might time the bond market may go along and raise rates also.
The yield curve had gotten as low as .88 so it had had a "rally" in
the last 2 weeks. This will be interesting as there is little talk
of a rescession for 2007 but the curve has been inverted for almost
6 months and it would be very unusual if a recession does not
follow.
Oil continued its consolidation on top of the 50-day with resistance
at 64-65.
GOLD has the stochastics again below 20 and a turn back up
over 20 while the price goes back over 640 I believe would trigger a
buy again.
The gold miner index 60-min chart
bounced at the 2-month trend line but still below both moving
averages. Like Gold the stochastics are to watch for a move back
over 20.
The HUI tried to break
out of the 60-min bull channel and dropped back instead but we still
watch as a break out may come next week.
On the street today a car was
stopped and the song "Life is Life" was playing very loud. I usually
only hear it in the summer though we are having a very warm December
for Moscow - was 45 today. I only heard one song from this group and
I guess this was their only hit. Here it is on Utube
Opus
Life is Life
ALFI Artificial Life Inc. love the
name - not not a biotech - a Hong Kong company who makes
games and software for mobile phones and devices. I have no
buy on the stock but show the chart as it has been very active
lately. This is a very thin stock with average trades of only 13K
shares but I know some subscribers like these more unusual
situations.
CVDT is
another that I have no buy point though maybe a momo play over
the high of $3.63. This is being touted as one to move to much
higher levels. (like 6 or 9) They operate some VOIP call centers in China so I
guess there is the buzz. You go there to place calls as many
people do not have phones. I personally think the market cap is
already too high but this is not a rational play. (If China
follows Russia as an example then in not too long most people
will have mobile phones at low enough rates they will not care
so much about if they have a "land line" or not. Anyway I wanted
to point it out for any momentum players or with patience it may
pull back much further in time.
The first 5 are from the message
board as I know mot subscriber do not read the board. There are many good plays put there each week by members.
EXTR from MB
has increasing volume and a new level over $4.30
LPX also from
MB looks attractive over $22.50
Motorhead pointed out
BWLRF with a break out
over $1.82
a good year
back to back Santa
Down first days then 5 day rally
But next year he was flying
range bounce
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