SANTA CLAUS RALLY ... You've probably been hearing and reading a lot lately about the so-called "Santa Claus rally". The term is often used to describe any market bounce that takes place during December (which is usually one of the strongest months of the year). There is,... READ MORE
VOLUME THINS AS HOLIDAY MODE HITS... Today's Market Message was written by Arthur Hill. - Editor Volume levels on the NYSE and Nasdaq were below average on Monday and Tuesday. Low volume is typical for the period between Christmas and New Year's. In addition to these... READ MORE
DOLLAR BOUNCE CAUSES PROFIT-TAKING IN GOLD ... After falling sharply all week, the Dollar Index bounced on Friday from potential chart support near its 200-day moving average. That caused profit-taking in gold at a time when bullion was testing its own 200-day average and a resistance line drawn over its July/... READ MORE
MORE STOCKS TRADE OVER 50-DAY AVERAGES... Last Friday, I showed an indicator that measures the % NYSE stocks trading over their 50-day moving average. At the time, the reading was only 30%. With most stock indexes having cleared that resistance barrier this week, the number of stocks trading over their 50-day... READ MORE
BONDS GO BALLISTIC... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor The surge in bonds over the last seven weeks is truly staggering. The iShares 20+ Year Bond ETF (TLT) is up some 30% from its November low. On Tuesday, the... READ MORE
FOCUS SHIFTS AWAY FROM SHORT-TERM RATES... The Fed cut its short-term Fed funds rate to "a target range" between zero and .25 today. More importantly, it announced that it was ready to take more aggressive steps to do whatever is required to get the economy moving again. That... READ MORE
BONDS AND STOCKS DECOUPLE ... With fears of deflation growing, I thought it a good time to review some of my previous writing on that subject and to explain what happens in a deflationary environment. Most traditional intermarket relationships remain the same, but some don't. My 1991 book entitled... READ MORE
% OF NYSE STOCKS ABOVE 50 MA... With all the recent focus on the major market indexes testing their 50-day moving averages, I thought it a good time to look at another indicator that measures the % of NYSE stocks that are trading above their 50-day averages. Chart 1 shows that indicator... READ MORE
CHINA LEADS GLOBAL BOUNCE ... One of our readers asked recently if China was starting to show any new signs of relative strength. After this week's upturn, the answer is yes. With so many markets rallying up to test their 50-day averages, China iShares (FXI) have cleared that resistance... READ MORE
STOCKS FINISH POSITIVE IN CHOPPY TRADING ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor Trading was rather choppy on Wednesday, but the major indices ended on a strong note and closed with modest gains on the day. In a nutshell, the... READ MORE
DON'T TRADE OFF ECONOMIC NEWS ... We had a nice example last Friday of the stock market rallying on very bad economic news. Friday's employment report was the worst in more than thirty years. And yet, the stock market rallied after a lower opening. Media watchers were... READ MORE
DOLLAR DROPS TOWARD NOVEMBER LOW ... A strong bounce in foreign currencies, and a drop in the U.S. Dollar, is giving a nice boost to commodity markets and stocks tied to them. Basic material, gold, and energy stocks are helping lead the stock market higher. So are consumer discretionary and... READ MORE
$40 WAS THE PREVIOUS OIL CEILING ... With crude oil having fallen $100 from its summer peak, and trading back below $50, the big question is whether there exists some price level that could stem the oil plunge and act as a possible floor beneath that market. My best guess is... READ MORE
FINANCIALS LEAD LATE SURGE ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor Stocks traded mixed most of the day, but a late surge lifted the major indices to their highest levels of the day and financials led the way. The Dow... READ MORE
DON'T CONFUSE SHORT- AND LONG-TERM TRENDS... I get the impression from recent feedback that some of our readers aren't clear about terms like "short-term" and "long-term" in describing market trends. It's important not to confuse the two. So let'... READ MORE
TIPS LAG BEHIND BOND RALLY ... Since commodities prices collapsed at midyear, fears of global deflation have grown. Longer-yielding Treasuries have been the principal beneficiary of that. Today's Fed comment that it may start buying longer-term Treasuries to push bond yields even lower have also given bond prices a... READ MORE
SHORT-TERM TREND HAS IMPROVED ... I wrote on Monday that I thought the major market indexes could reach their early November peak and/or their 50-day moving averages on the current rebound. That's not such an ambitious forecast. Even so, a number of readers asked why I was even... READ MORE
NYSE COMPOSITE JUMPS 7% ... Thanks largely to a government bailout of Citigroup that pushed that stock up nearly 60% today, financials gained 15% and helped ignite a 6% jump in market market indexes. It was the first two-day jump this month, and it occurred on decent volume and positive breadth... READ MORE
FINANCIALS LEAD RALLY ... A government rescue plan for Citigroup is pushing that stock 60% higher this morning and giving a big boost to the financial sector which is gaining more than 10% on the day. Financial buying has spilled over to the entire stock market which is trying to build... READ MORE
GOLD HITS MONTHLY HIGH ... I wrote in yesterday's message that recent fears of deflation were giving a big boost to Treasury bonds. I also wrote that, in a deflationary environment, stocks and commodities usually fall together and become closely correlated. That's certainly been the case since... READ MORE
WHERE THOSE LOWS ARE LOCATED ... The 2002 bear market lows are under attack. Charts 1 and 2 show where those lows are located for the S&P 500 and the Dow. A 6.7% plunge in the S&P 500 put it below the 2002 intra-day low at... READ MORE
ANOTHER WEDNESDAY WHACK ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor The Dow Industrials declined for the tenth Wednesday in a row on 19 November. This is becoming a habit with five of the last six Wednesdays sporting declines greater than... READ MORE
DOLLAR RISES AS COMMODITIES FALL ... Chart 1 show the Power Shares US Dollar Bullish ETF (UUP) moving up toward its October high. The ability of the dollar to continue its rise is keeping commodities under pressure. The streetTrack Gold Trust (GLD) in Chart 2 is almost a mirror image of... READ MORE
NO FOLLOW-THROUGH TO KEY REVERSAL DAY ... Last Thursday's upside reversal day on strong volume raised hopes for a short-term rally attempt. Unfortunately, there's been no upside follow-through since then. The daily bars in Chart 1 show the S&P 500 losing ground over the last... READ MORE
S&P JUMPS 6% AFTER TOUCHING NEW LOW... After dropping briefly to the lowest level since March 2003, the S&P 500 achieved an upside reversal day (as did all of the other major indexes) that resulted in a 6% gain. It also did that on the highest... READ MORE
ANOTHER DOWN WEDNESDAY ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor What is it with Wednesdays? The Dow Industrials declined for the ninth Wednesday in a row. Of these nine down Wednesdays, the Dow was down more than 2% six times.... READ MORE
CYCLICAL STOCKS CONTINUE TO UNDERFORM ... One of the easiest ways to measure the strength or weakness of the stock market and economy is to compare the relative performance of economically-sensitive stocks (cyclicals) to economically-resistant stocks. The logic is very simple. In an up market (and a rising economy), cyclical stocks... READ MORE
ECONOMISTS ARE ALWAYS THE LAST TO KNOW... Friday's report that the unemployment rate jumped to a fourteen year high of 6.5% has finally convinced the economic community that the U.S. economy is in a recession and a deep one at that. As a result, we'... READ MORE
WEEKLY EMA PERFORMANCE ... I wrote recently about the strong track record of the 13 and 34 week exponential moving average (EMA) lines in spotting important market turns. One of our readers asked how that weekly combination did over the past thirty years. Here's a look. I'm... READ MORE
BROAD SELLING PRESSURE HITS WALL STREET ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor After moving sharply higher the last six days, the market took a big breather with a sharp decline on Wednesday. Selling pressure started with a gap down... READ MORE
LIBOR AND VIX CONTINUE TO DROP ... Short-term market conditions continue to improve. One reflection of that is the continuing drop in the LIBOR lending rate (London Interbank Offered Rate). Chart 1 shows the three-month LIBOR dropping another 15 basis points today to 2.71% which is the lowest level since... READ MORE
LIBOR DROP ENCOURAGES MARKETS ... One of the recent positive trends is the continuing drop in the three-month London Interbank Overnight Lending Rate (LIBOR). That rate determines what banks charge each other for loans. During the credit freeze that started in mid-September, the LIBOR jumped from 2.8% to 4.8%... READ MORE
VOLUME REMAINS LIGHT ... In a legitimate upturn, one of the first things we look for is rising prices and rising volume. We've seen a modest price upturn over the past week, but very little volume to go along with it. Today's price bounce came on lower... READ MORE
RETAILERS FEELING THE PINCH... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor As expected the Fed cut the federal funds rate by 0.5% and this key rate now stands at 1%. In its policy statement, the Fed noted a decline... READ MORE
OVERSOLD FOREIGN MARKETS BOUNCE ... Over the past week, the U.S. market has held relatively firm while foreign shares have mostly fallen to new lows. Today's rebound in foreign shares is finally giving a boost to stocks in the U.S. Charts 1 and 2 show the EAFE... READ MORE
50% DROP WOULD MATCH 2000-2002 LOSS ... The monthly bars in Chart 1 put the last eight years of market action in good perspective. And the chart is pretty orderly. From its 2000 peak to its late 2002 bottom, the S&P 500 lost 50% of its value. From that... READ MORE
AN ARMY OF PHDS DIDN'T SEE ANY PROBLEMS ... It was quite interesting listening to Mr Greenspan explain to Congress that the army of PHDs employed by the Fed (which he claimed were the best in the world) didn't see any problems brewing in the housing market.... READ MORE
BROAD SELLING HITS WALL STREET... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor Stocks were hammered on Wednesday with across the board selling pressure. All nine sectors were down sharply on the day. All 30 Dow components were down and breadth... READ MORE
CONVERGING TRENDLINES ... One of our readers pointed out that the short-term pattern of the last eight trading days has a triangular look. A "triangle" is a trading pattern that is characterized by two converging trendlines. I've applied them to hourly bars in the following charts. The... READ MORE
FOREIGN WEAKNESS HURTS CURRENCIES ... The Fed started lowering interest rates more than a year ago to stem the financial crisis in the U.S. Foreign central banks didn't follow along, while some even raised rates. With foreign economies weakening along with the US, the belief is that foreign... READ MORE