STOCK MARKET WATCH, Monday December 22 (#1)

THE DOW REPORT
"Is Technical and Fundamental Analysis Wrong?
Could it be that we really have entered a new paradigm?"

Throughout most of the summer rally many of the market technicians, myself included, have been warning that this rally has reached dangerous levels and that its end should be near. Yet, the market continues to advance. Let’s look at a sampling of the technical and fundamental indicators that seem to be failing.

For starters let's look at advancing volume. As you all know I have been reporting that since June this rally has been unconfirmed by advancing volume. This is a naturally occurring phenomena as the market moves into its annual cycle top. This is also an undeniable negative for the market. Yet, prices move higher.

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Back in June I reported that the percentage of Bulls to Bears reported by Investor Intelligence were at the highest levels since 1987. Peter Eliades has done extensive work with sentiment and on December 17, 2003 he reports, “We spent some time looking through this year's Investors Intelligence (30 Church St., PO Box 2046, New Rochelle, NY 10801) data in a spreadsheet that has the weekly data going back to 1969 (prior to that time data was released every two weeks rather than weekly). We noticed that the weekly reading of bulls divided by bulls plus Bears has been over 70 percent for 31 consecutive weeks and we were curious if that ever happened before over the past 3 + decades. The answer is no. Think about that! We just recently finished the decade of the 1990s which were remarkably free of anything resembling a bear market. The stock market actually advanced from 1982 to the year 2000 without seeing one year where the low of the year surpassed the low the previous year and yet, through that whole period of time, sentiment never reached the pervasive levels of bullishness that we now see after a rally which has failed to take either the Dow or the S&P anywhere near their all-time highs and which, when viewed in light of the Nasdaq Composite, has brought that index back only slightly towards its all-time highs as current prices remain over 60% below the highs of the year 2000.” My findings on sentiment are exactly the same as Peter’s. As I said earlier I look at the ratio of Bulls to Bears and this ratio now sits at 3.15 Bulls for every 1 Bear. This ratio has been hovering at or above the 2.45:1 level now for 29 weeks. This is also an all time record. We have never seen a period where this ratio has been at this level for this long before. Yet, prices move higher. You can contact Peter at 800-888-4351.

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So, could it be that we truly have entered a new paradigm and none of the historical indicators work anymore? Will the rally off of the March 2002 low cause us to have to rewrite the history books? Can we now take over 100 years of market history and statistical norms and throw them out as a relic of the past? Does value mean anything? Is technical analysis now meaningless bunk?

the answer is NO (more...)

CHICAGO (Reuters) - U.S. Treasury prices slipped on Friday, a set-back from three days of strong gains, with losses limited by flight-to-safety buying after a report that New York City might face the threat of an attack.

ABC News reported on its Web site that U.S. intelligence had received information about a credible threat to the city, possibly from a suicide bomber.

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"A bit of a reappraisal occurred about the Fed after last week (when Fed policy-makers met and minutes from the Fed's prior policy meeting were released)," said Dominic Konstam, interest-rate strategist at Credit Suisse First Boston.

Treasury yields are approaching critical levels that could signal breakouts to the downside and confound dealers who have been expecting yields to trend higher.

story

LONDON (Reuters) - The dollar fell to the latest in a series of record lows against the euro on Monday as a heightened security alert in the United States provided fodder for dollar bears in a seasonally-thin market.

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The dollar fell more than half a percent to $1.2447 against the euro in a skittish European session, notching up its fourteenth record low in 17 trading sessions. The U.S. currency also came within a whisker of last week's seven-year low against the Swiss franc.

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The market showed little reaction to weekend confirmation by the Japanese government that it would raise the borrowing limit for its foreign exchange intervention account.

Japan's willingness to sell yen for dollars to maintain export competitiveness means European currencies have borne a greater weight of the dollar's decline.

more

It makes me wonder if Japan is using the dollar as a proxy in a trade war with China.

NEW YORK (Reuters) - After months of looking at nothing but the bright side of a weaker dollar, investors are starting to look at the dark side of its struggle against the euro.

Demand for the dollar has been dampened by concerns about the widening U.S. current account deficit and expectations that benchmark U.S. interest rates will remain low.

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Worse, if foreign U.S. investors start to abandon dollar-denominated securities on concerns that any profits will be lost as they convert back to their own currencies, U.S. investors may also take money from the stock market in a bid to beat the rush.

"If the dollar's slide is seen as transient, then the market will stabilize as investors realize the damage has been done," said Anthony Chan, senior managing director and chief economist at Banc One Investment Advisors, which oversees $180 billion. "But not even domestic investors are blind and they don't want to be in front of the train."

DOOMSDAY SCENARIO & SILVER LINING

:shrug:
The addition of that Orange Alert to our stocking may throw things off. Not much on the economic calendar this week. Plus, a lot of traders have headed out of the city for the holidays--so we're looking at the little players the next couple of weeks. I repeat :shrug:

Final shopping and baking chores will keep me away from the computer much of the week but I'll drop by when I can.

on edit---what I saw in the stores this weekend was NOT encouraging...fewer buyers than I expected, less traffic. Should have been busier.

Little players... Oh boy! Either they are scared little chickens or pretend high rollers playing with "other people's money".

I went through the roof yesterday when someone mentioned this alert level warning. Their comments also carried something about surface-to-air missiles being used to down a commercial airliner.

My retort was one of, "What the hell are you and I supposed to do about that? This is politically motivated. Four years ago this information would only be circulated among law enforcement agencies because any sane public safety administrator would never want to terrorize the general public over something they are powerless to prevent."

Saddam Hussein was nabbed by the Kurds and given to the US when the Kurds were given two seats with the Iraqi governing council.

Bush poll approval goes down. Terror level goes up.

EDIT: Here's a Tom Ridge quote - "Gather with your family and friends and enjoy the spirit of the season," Ridge said. "America is a country that will not be broken by terror. American is a nation that will not be broken by fear."

Incomplete sentence: "American is a nation that will not be broken by fear (by anyone but the Bush administration)."

Wal-Mart sees December same-store sales near low end of forecasts, Reuters reports. Details soon.

Details: Wal-Mart December sales weak

http://money.cnn.com/2003/12/19/commentary/bidask/bidask2/index.htm

A big change at Wal-Mart?
A little-noticed management shift at the country's biggest retailer could have major implications.
<snip>
Disappointing sales over Thanksgiving drove home the need to freeze profits on a per-item basis, he wrote in a note published Thursday, and Watts and Degn are not traditionally price-oriented players like Harris was.

Balter thinks the change in strategy will lead to higher profit margins at Wal-Mart, and as a result raised his rating on the company to buy from neutral.

There are other reasons Wal-Mart might want to get less aggressive on pricing. It's a big importer -- one tenth of direct U.S. imports from China go to Wal-Mart -- and import prices have for the first time in years begun to edge higher. It is also becoming the subject of gnawing political criticism over the "Walmartization" of the U.S. economy, where highly skilled manufacturing jobs get shipped overseas, and U.S. workers are forced into low-paid jobs as retail clerks hawking foreign-made wares.

I will check back later as possible. We have durable goods reports due this week. Otherwise, not much else is on the calendar during this shortened holiday trading week. Please take care.

Ozymandius

Hi everyone!

Today's reading is SHOCKING with no changing lines.
Probably wrong. Nothing shocking has ever happened when Ching predicted it.

Oh well, it doesn't hurt to be careful, I guess.

Have to run for now!

:hi:

Dow 10,261.85 -16.37 (-0.16%)
Nasdaq 1,945.24 -5.78 (-0.30%)
S&P 500 1,086.33 -2.34 (-0.21%)
10-Yr Bond 4.112% -0.021


I hear the pitter-patter of little feet, so I guess I can get out of here! Catch you all later.

Good Morning everyone :hi:

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=s

Last trade 87.91 Change -0.20 (-0.23%)

Settle 88.11 Settle Time 23:33

Open 88.05 Previous Close 88.11

High 88.30 Low 87.78


Well, the dollar should be interesting to watch as our alert level has been raised. Once again, it is getting harder to discern news from rumor. As much as I would love to do more research on this, my time (like everyone elses) will be limited for the next few days. Most of the previous research would have to be tossed out now anyway, as this latest "threat" has thrown a monkey wrench into the mix once again.

It was interesting on Friday, when they first reported the threat of attacks but did not raise the level. The news was reporting the dollar loosing to the Euro, yet only a slight dip at ino. Also, those reports on Friday came as the dollar was approaching the previous days high rather rapidly on ino. :shrug:

I am afraid all we can do is watch and wait.

Dow 10,273.56 -4.66 (-0.05%)
Nasdaq 1,941.81 -9.21 (-0.47%)
S&P 500 1,086.91 -1.76 (-0.16%)

Because there's too much great stuff in this daily thread to let it slip away for the West Coasters like me... :hi:

Marketeers are MIA for the holidays! Only to be expected....

Dow 10,282.29 +4.07 (+0.04%)
Nasdaq 1,944.76 -6.26 (-0.32%)
S&P 500 1,088.02 -0.65 (-0.06%)
10-Yr Bond 4.166% +0.033

A bit of a ride today, more for the Nasdaq than the Dow

Dow 10,302.15 +23.93 (+0.23%)
Nasdaq 1,948.13 -2.89 (-0.15%)
S&P 500 1,089.36 +0.69 (+0.06%)
10-Yr Bond 4.170% +0.037

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=s

Last trade 87.95 Change -0.16 (-0.18%)

Open 88.05 Previous Close 88.11

High 88.30 Low 87.78

The chart looks a bit like a roller coaster today. Lots of ups and downs. The big change from the high to low came between 3 and 4:30 am.

http://www.fxstreet.com/nou/content/103760/content.asp?menu=market&dia=22122003

The index of leading US economic indicators increased 0.3 percent in November following a 0.5 percent rise in October.
The US consumer price index fell 0.2 percent and the core CPI contracted 0.1 percent in November, adding to confidence that inflation in not on the horizon.
Industrial production rose 0.9 percent in November from a revised 0.4 percent gain in October. The November gains were the largest since October 1999.
The capacity utilization rose to 75.7 percent from October's 75.1 percent.
Manufacturing in New York State grew 37.4 in December following a record of 41 in November.
Meanwhile, the Philadelphia Federal Reserve Bank’s index of regional industry jumped to 32.1 in December from 25.9 in November, while new orders rose to 41.8 in December from 20.8 in November.
The number of initial jobless claims for state unemployment benefits fell to 353,000 last week from a revised 375,000 a week earlier.
In other news, the US current account deficit decreased to $135.0 billion in the third quarter of 2003, down 3.1 percent from the second quarter and up from $122.7 billion in the third quarter of 2002.

Hmmmm, all of this "good news" but the dollar slides. Perhaps level orange has become the "magicians other hand". Greenspan wants that dollar lower...have good news economically, but keeping everyone focused on the possibility of an attack, buys him a bit more time for that 80-85 goal.

Any bets we see our fantastic intelligence thwart a terror attempt right about the time the buck sees 80-85? Probably just after good December numbers come out. I feel UE first claims will be down (corps just don't lay-off in December much, announce maybe-layoff rarely). Trade deficit will be down, most indicators will look pretty rosy. Once that pesky orange level is removed and confidence in our ability to "protect" ourselves (from ourselves Ha!)rises, look out interest rates!

Just a guess, get out the tinfoil hats.
:tinfoilhat:

Okay, isn't December supposed to be a bit of a dead month around the office? Is everyone else's office slow right now?

Mine has been a zoo since Thanksgiving, with little easing off, even this week. Such activities really intrude on my DU reading and posting time. :evilgrin:

Gong into the last hour - the Dow has a nice rally going, while Nasdaq moves sideways below the waterline.

Dow 10,302.67 +24.45 (+0.24%)
Nasdaq 1,944.69 -6.33 (-0.32%)
S&P 500 1,088.69 +0.02 (0.00%)
10-Yr Bond 4.176% +0.043

:hi:

Busy, busy, busy. Gotta get those year end figures up!

This week. And even today there were still meetings and conference calls.

Tomorrow will be the official beginning of the lull.

"Rock climbing, Joel."

It's been a craggy fight, but looks like they will all be in the black at day's end.

Dow 10,329.11 +50.89 (+0.50%)
Nasdaq 1,950.93 -0.09 (0.00%)
S&P 500 1,091.75 +3.08 (+0.28%)
10-Yr Bond 4.164% +0.031

Dow and S&P stayed up, while the Nasdaq ticked above the waterline at 3:30 and moved a little upward till close. Money leaving the 10 year to go into Wall Street, though.

Dow 10,338.00 +59.78 (+0.58%)
Nasdaq 1,955.80 +4.78 (+0.25%)
S&P 500 1,092.94 +4.27 (+0.39%)
10-Yr Bond 4.164% +0.031

See everyone tomorrow here.

(on edit - two typos)

Are we already up to 10,338?

Anyways, I'm traveling tomorrow for the holidays. Everyone have a Merry Christmas and/or Happy Hannukah!