Technical Vantage Point

While being a quant is my predisposition I contend that a person active in the stock market trades at a severe disadvantage when their proclivity is nihilistic in the interest of technical analysis. In today's marketplace the magnitude of trading from a strong technical vantage point is cyclopean in the least. It is this elucidation in the aforementioned that should guide a person in and out of his chosen investment. In many cases the technical merits of a potential investment is the illuminating catalyst spawning the very position. Anyway, I digress.

How many individual investors were buyers during this year's Santa Claus rally 12/21 and 12/24? Despite the strong volume on the 21st the trend suggests that longs stay sidelined until pivotal resistance levels are taken out. I wouldn't be enthusiastic for any prolonged run until the S&P moved through 1525.

A little more knowledge, sure, but discipline, certainly, the separating chasm; the difference between the Joes and the Pros.

Yahoo Finance Poll: 180,908 respondents

Is the U.S. economy headed for a recession? Yes = 56%, down from 58% reported on 12/21/07

Forcing Nothing; Not Much Going On

The general public is beginning to worry more about the economy than they do about Iraq. This statement doesn't surprise me, however some of the ridiculous sentiments in the article do.

More news on the housing front: New-Home Sales plunge to lowest level in more than 12 years.

Did you know that WalMart accounts for about 40% of all DVD sales?

Interesting News Affecting the Markets

News of lower than expected Durable-Goods orders and the assassination of Pakistani opposition leader Benazir Bhutto is taking it to the overall markets.

DOW 13433 (-.88%) NAZ 2700 (-.91%) S&P 1486 (-.78%)

• AGU (73.73 +1.42%) Book profits? I don't know yet.
• ESLR (17.45 -7.38%) It's moving alright, down over 8%. The volume is healthy though and I wonder if this has the potential to rebound. This pullback may be a second chance to get in. Watch and see.

Review of Current State

I've not found any material trouble areas upon perusing the portfolios.

Review of recent winners:

• BBI (4.18) +30.58% since entry 12/7/07. No change in disposition. It's a speculative, entry level position of 25% of full stake.
• AGU (72.76) +16.23% since entry 12/21/07. Watch for uptrend and volume to break to take profits. 50% of full stake.

Review of potential positions:

• STLD (60.41) broke out nicely (12/21/07) on the 4 million+ shares I was looking for. Must wait for a pullback unless the volume goes crazy. Currently the max. entry point is $59.96.
• ESLR (18.84) is breaking out on 3X average volume. It's going to move today but max. entry point is $18.64

DOW (13552) NAZ (2724) S&P (1498)

AGU (64.45 +3.95%)

It looks like 64.25-64.50 could be another good entry point for AGU as I believe the brokers pushing the secondary issue will reset, reload and fire away again. We'll see. All-time high: $65.03

Consumer Spending Surges in November

The markets getting a breath of fresh air today with the Consumer Spending news.
AGU (64.70 +4.35%) and BBI (3.86 +8.73%) working out well thus far; only 1/4 positions in both though. I'd missed the initial run in NFLX (28.87 +5.98%); watch it for an entry point.
Looking at STLD (56.60 +3.40%); volume of 4 million + shares would be nice.

Markets Overview

Taking this "down time" to read, research, review list of all current and possible positions to accumulate. BUD, AGU, URBN, BBI, UST, HNZ just to name a few.

Pivotal Levels:

S&P: 1,433 more so than the Fib 62 of 1445; 200 dma is 1,488
DOW: Support at 13,100? 13,287 is the Fib 62; 200 dma is 13,319
NAZ: 200 dma is 2,603

Still Happy Still Sitting Out

DOW (13202 -1.03%) NAZ (2590 -1.74%) S&P (1451 -1.13%)

I see no reason to buy. The DOW is crossing below its 200 dma of 13,304 and it has signaled a Double Bottom Breakdown with a target of 12,850.

The NAZ is touching its 200 dma of 2,600 and the P&F chart is intact.

The S&P had crossed below its 200 dma of 1,487 on Friday and no new signal has developed on P&F yet.

On a positive note, BUD, WDFC, HNZ & some retail positions are hanging in there today.

So Now What?

The Fed has provided the fireworks and now that the show is over now what? I don't mind waiting it out to identify a trend one way or the other. I can say with absolute conviction that I won't be comfortable buying into a rally until the S&P 500 clears 1525.
This means that I'll sacrifice nearly 2.5% of upside from current levels (1488), a completely acceptable level of opportunity lost.
There is resistance at around 1500 which also coincides with a declining 50 dma although breaking through that level does not motivate me into action. Of course we'll be looking for volume on any push beyond 1525.

What will the S&P 500 do between now and year-end?
Don't know, don't care, however, I did answer the survey with a "Trade sideways" to see the results. Here they are:

Rise 3% or more: 25%
Rise less than 3%: 23%
Trade sideways: 28%
Fall less than 3%: 11%
Fall 3% or more: 13%

125671 Votes to date

Glad to Be Sitting Out

The Market's action today didn't demonstrate much optimism. It's true that we'd miss out on a couple hundred basis points of performance if the indexes had sprung. In the end patience prevails.

DOW 13459
Day's Range: 13322.21 - 13704.52

Fed Sending a Signal

The Fed is sending a signal that they're going to be very proactive about the "credit crisis". That has spurred the market upwards at the onset. Cautiously optimistic on the overall markets but skeptical that we've seen the end to troublesome economic news. Sitting tight but review and load:

• URBN (28.36)
• BRCM (28.54)
• RAI (68.79)
• WDFC (41.25) H.B.P. $41
• HNZ (48.02)
• UST (59.39)
• WAT (78.85)
• BUD (53.38)

Pivotal Levels: DOW 13630, NAZ 2725-35, S&P 1505

200 dma DOW 13280, NAZ 2595, S&P 1485

Fed Cuts Rates by Quarter Point

Taking some profits off the table:

• WMT
• UST
• SPY

Back to 34% cash

Resistance turned support?

DOW 13630, NAZ 2725-35, S&P 1505

DOW 200 dma 13280, NAZ 2595, S&P 1485

Recent Economic News

Consumer Confidence Near 2-Year Low

President Bush announced a plan to help suffering homeowners who used subprime lending.

Morgan Stanley thinks that home prices may see 3-year fall. They must not think it's going to get too terrible considering their recent investment. Although a 60% discount to "market value" is probably a bargain regardless the price of Real Estate 3 years from now.

Moody's Economy.com agrees and adds that we could see -30% peak to trough.

Employers added a solid 94,000 jobs to their payrolls in November, the unemployment rate held steady at 4.7 percent and wages grew briskly, encouraging signs the nation's employment climate is holding up in the face of turbulence in the housing and credit markets.

Oil is around $90.

"Bush subprime plan limited but a step forward" CNNMoney.com Hell, we should, as good citizens, pool our collective efforts and bail out everyone who bought a house they couldn't afford based on some bogus payment that they orchestrated with overzealous loan products. Would that make CNN happy? I'm in.

Resistance? DOW 13630, NAZ 2725-35, S&P 1505

• DOW (13624), Double Top Breakout on 12/6; P.O. of 14900
• S&P (1508), Bearish Signal Reversal on 12/6; P.O. of 1690
• NAZ (2702), no new signal

RAI (70.84 +.55%) WDFC (40.33 +.52%) BUD (52.15 +.08%)

Adding to Reynolds once again with limits at $71. Volume is healthy today.
Keeping close tabs on WD-40 and its volume.
Interested in more BUD if the volume/price cooperate. All time high: $55.19 Buffett owns 4.85%
Heinz annual high is 48.73 & all time high is $58.81, November 1998!
Urban Outfitters all time high is $33.77 on November 21, 2005

2:46 PM
I've just read this article concerning Reynolds and it disturbed me. Yes I've known that cigarette companies market to the younger set so to lock in their customer base. It shouldn't impact me since we're not socially conscious investors but it does and I thought I'd make mention of it. From a trader's perspective it's out of sight, out of mind.

Multifarious Morsels

Yahoo Finance poll today: 77% of respondents expect a rate cut on 12/11.

Diamond Offshore announced contracts worth up to $2.3 bln.

Top independent research firm positions EMC as a leader in enterprise content management. Seeking Alpha reports a Barron's interview with $2 billion fund manager and stock advisor Don Hays of Hays Advisory Group who likes EMC.

ARO (25.18 -1.45%), 200 dma $25.35; where to buy again? $24? Then $21?

CHK (37.46 -1.03%); support near $34?

Homebuilder Lennar Corp. (LEN 16.04, +0.20) and Morgan Stanley Real Estate, an affiliate of Morgan Stanley (MS 52.38, -0.33), announced an investment joint venture to acquire, develop, manage and sell residential real estate. Concurrently, Lennar, which is reeling from a slowdown in the U.S. housing market, agreed to sell the venture a diversified portfolio of land valued at $1.3 billion for $525 million. A sign that we're nearer the bottom?

Sears' (SHLD) Lampert fires back

DOW 200 dma 13253, NAZ 2589, S&P 1484