Daily US Market Comments 20 Dec 2006 by MastersoEquity.com
FUNDAMENTALS
Markets closed mixed after spending most of the day deep under water. The early drop in oil prices caused an immediate ditching reaction in the sensitive energy sector bringing the markets down hard. However, as oil prices recovered later in the day to close up by another 1.5%, the energy sector rebounded, lifting the Dow to close up 0.24% for the day. It sure looks like crude oil price, whose ditch supported the recent rally, needs to remain strong in order to boost the energy sector and consequently, the market. PPI numbers will rise with rising oil prices and that could give rise to renewed inflationary fears. Crude oil closed $63.15 per barrel with Exxon Mobil up another 2.1% to close at $77.06. From the recent market actions, it now seems like the only sector left that could still move is the energy sector. The rest of the market seems almost powerless to give lift to the markets. However, if the energy sector continues to rise on rising oil price, the rest of the markets will very soon come to yield under rising inflationary pressure. Unless the markets see some new strength and reason for optimism across the board very soon, there could only be one direction left for it soon.
TECHNICALS
Markets closed sideways yesterday after a scary opening. NASDAQ is the focus of attention here today. NASDAQ has rallied on its 30 SMA steadily since August. Yesterday, the NASDAQ composite index broke below its 30 SMA line and its rising trendline for the first time since August. This is a trendline break on above average volume.... meaning, bad news. NASDAQ seemed to have missed out on the strength in the Dow so far and with the Dow also slowing down, the NASDAQ composite could win this tug of war to downside along with major indices soon. All short term trend indicators are showing a bearish trend developing on NASDAQ for the first time since the rally begun in August. The only consolation is that it managed to close somewhat at the 30SMA line by the end of the day. Today will be a critical day, if NASDAQ get back up today, it could negate yesterday's action as a false ditch. If NASDAQ continues lower today, I will have to announce that we are at the beginning of the Bear trend for the NASDAQ composite index.
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Markets closed mixed after spending most of the day deep under water. The early drop in oil prices caused an immediate ditching reaction in the sensitive energy sector bringing the markets down hard. However, as oil prices recovered later in the day to close up by another 1.5%, the energy sector rebounded, lifting the Dow to close up 0.24% for the day. It sure looks like crude oil price, whose ditch supported the recent rally, needs to remain strong in order to boost the energy sector and consequently, the market. PPI numbers will rise with rising oil prices and that could give rise to renewed inflationary fears. Crude oil closed $63.15 per barrel with Exxon Mobil up another 2.1% to close at $77.06. From the recent market actions, it now seems like the only sector left that could still move is the energy sector. The rest of the market seems almost powerless to give lift to the markets. However, if the energy sector continues to rise on rising oil price, the rest of the markets will very soon come to yield under rising inflationary pressure. Unless the markets see some new strength and reason for optimism across the board very soon, there could only be one direction left for it soon.
TECHNICALS
Markets closed sideways yesterday after a scary opening. NASDAQ is the focus of attention here today. NASDAQ has rallied on its 30 SMA steadily since August. Yesterday, the NASDAQ composite index broke below its 30 SMA line and its rising trendline for the first time since August. This is a trendline break on above average volume.... meaning, bad news. NASDAQ seemed to have missed out on the strength in the Dow so far and with the Dow also slowing down, the NASDAQ composite could win this tug of war to downside along with major indices soon. All short term trend indicators are showing a bearish trend developing on NASDAQ for the first time since the rally begun in August. The only consolation is that it managed to close somewhat at the 30SMA line by the end of the day. Today will be a critical day, if NASDAQ get back up today, it could negate yesterday's action as a false ditch. If NASDAQ continues lower today, I will have to announce that we are at the beginning of the Bear trend for the NASDAQ composite index.
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posted by Jason Ng at 6:58 PM
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