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Thursday 12/10 Market Review

|Includes: BAC, C, GOOG, GS, HPQ, Microsoft Corporation (MSFT), ORCL, PNC, WFC

 The jobless claims as well as the trade deficit came better than expected as I predicted in this week earlier article on market forecast. Nevertheless, the jobless claims seemed a bit mixed as new claims declined while the overall number was still in the red which should not come as a surprise as the economy is still weak.

New foreclosures came as declining. Analysts expressed their doubts pointing to a new wave of delayed and probably new foreclosures that would slow the market next year. Again the end of first quarter 2010 and the beginning of second quarter slowing is again something we predict for more than one reason (check my previous post on this issue). Citi announcing that it is paying the TARP money back definitely will help the banking sector and brings new sense of optimism to the market.
The market seemed to take off on the open, some pull back and then we saw a turn to the upside again. The triple bottoms we were looking for materialized finally pointing to a further ascends in 2010.
We must admit that in spite of the “positive” data, we all know the real picture is not so rosy. The recovery is moving on slower base than expected. This could weigh on the market slowing its spectacular ascend to date , that to say the huge climbs to stratospheric levels touching 1118, is not going to be the case at least till the end of the year. Trading is moving to the cautious zone and the market will need really, really good news to show us the same frenzy hikes it showed so far since March 2009. We are still bullish, but caution should be the name of the game.
The European markets shrugged Greece, Dubai and even Spain issues, something we expected and acted as such when the panic was storming the markets, as we also predicated, it was, as usual, a good time to accumulate on relatively lower prices and as usual, sell them to those who are consumed by the euphoria of the market climbing after several days of declines. After a couple more days of down and up trading where institutions will distribute their overpriced shares, the market will find a new excuse to dip again, fish for bargains and then take us to the clouds again.
Now it is 10.55 am in New York and the market seems to confuse itself. The indecision is showing in the small trading range that has been going on now for nearly an hour.  I am long with a double digit number of contracts with a market that is giving mixed signals and I am trying to read the market mind. I know all the weak hands will drop the ball before the strong none jittery hands hike the price back to above 1105 a level we saw during this day. I am waiting.
The NIKKEI is exhibiting a down trend with Japan economic wows which will pull the S&P futures a bit down in after hours, and Europe though climbed today but showed some slowing down towards the close shying from crossing 2900 point again. This may point to further declines as the STOXX erase its previous gains in a cautious risk aversion distribution towards the end of the year as traders close their books before the holidays.
The banking sector is mostly in the red keeping the rally in check. Other sectors were mostly in the green with pockets of weakness. WFC, BAC, PNC, MS, GS all were in the red by 11 am ET. APPL that showed for the first time in days a true positive turn in the morning is turning to a neutral zone.  Joining APPL is MSFT, HPQ, GOOG, and INTC with ORCL defying the trend with nearly 3% increase so far today. The technology sector that helped the market to hold when the banking sector brought it down is standing on the sides. Its 11:10 am ET now. The trend is still up on futures though and I am holding tight.
It is almost 12pm in NY and the market and the pattern shows a distribution of the early morning party gains. Would this market start a pre-closure one more hike. We will see. It seems that it may touch the 1098-1099 zone again today and may be even 1094 or even lower in the coming few days especially during after market hours. I don’t mind that as I am out from my previous long and waiting to catch the next move with an entry on cheaper prices. Prices though came from 1105-1106 zone to 1102-1103 zone, they are still holding, albeit, not quite in the best of ways as we see the ticks spending most of its time in the red. The narrow range does not help as whipsaws become a problem, but the game is clear and sure there money to be made in the range. The market on the 60 min chart is descending to touch its support short term trend line around 1098-1096 zone again.
Goldman Sacks is announcing that it won’t be paying its executive a cash bonus this year and instead it will be stock options with an exercise date set 5 years from now. A well timed corporate move to show stock holders that the management is indeed invested in the firm coupled with the massive earning of Goldman Sacks surly makes the stock interesting, the only problem now is the analyst expectations of GS which may hurt its stock than help it.
 It is 12.46 pm in New York the market is turning into a tick swing play with persistent distribution that is mostly obvious on the tick chart showing a down trend from the beginning of the day. The daily 60 min chart is showing the weakness with a shy reluctance while the ticks chart is showing the constantly growing weakness as prices fail to move up again.
It is 1:25pm and the ticks are showing persistent weakness as the selling/distribution is accelerating. The banking sector is still showing weakness in spite of GS announcement today (sure it is hard to see how it should help the overall market but it is still a positive step). APPL is falling back in the red with small decline of 0.42%, with most of the ticks in a neutral giving up some of their earlier gains. Other sectors show still an uptrend with the service sector leading the pack. Advancing and declining issues have been tilting towards declining at 47% to 42% after the initial gains of the day where we have seen more than 72% advancing earlier in the day coming from 31% into the green zone.
It is 1:53pm and we are looking to the market confirming its progressively declining trend as we are approaching 3pm. The 60 minute chart is confirming the down trend with another lower close.
The big picture is a positive day with a bullish trend as predicted though not quite as I hoped. The market traded in a range and pocketed gains while keeping the heat map in the green. If this sounds like being harsh then we should be reminded that, yes, the market is harsh.
Lots of gains on the tick play today and some moderate gain on actual big moves for those who missed the pre-market party.
Good luck and good trading.
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Disclosure: ORCL