Mark Fichera currently uses skills learned over the past 40 years to provide investment ideas based primarily on technical analysis. He is particularly well versed in point and figure charting, trend line charts, Japanese candlestick complimented by various technical indicators and...
In the immortal words of the late, great, James Brown, "I feel good "maybe best describes the current psyche of stock market participants. I, myself, am feeling pretty good about this market. Technical support for my positive bent is the persistent strength in the New York Stock Exchange breadth (advancing stocks minus declining stocks). The broad market or breadth has led this rally from its beginning some 6 months ago!! Currently, the cumulative advance/decline totals are just below the rally highs. One good day would result in a new rally peak. This would be a technical positive probably leading to further new highs in the popular averages during the "Santa Claus" week and also into January of the New Year.
We are in the 28th week of a rally off the lows of June 13, 2006. But not all segments of the market participated during the past 5 weeks (since last letter - dated 11/24/2006). The DOW 30 Industrials and S&P 500 gained approximately 1 %. The NASDAQ declined by 2 % and the DOW Transports dropped 6 %. Followers of the DOW Theory have to be concerned by the DOW Transports not confirming recent highs in the DOW 30 Industrials. Although not part of the DOW Theory, the NASDAQ's performance magnifies that concern.
Investor sentiment has become more bullish over the past month. Whether you look at option trading or Bulls versus Bears surveys, the message is clear. The crowd has overcome much of its reluctance to buy into this rally. The high level of bullishness, and in particular the decreasing number of bears (lowest since August, 2005), indicates a possible market top in the short term. The duration and magnitude of any "correction ", as always, is difficult to predict. The crowd's behavior during a pullback gives the best clues. If it is similar to the May-June, 2006 period, it will not last long nor be too painful. But we won't know until a "correction "actually develops. Best current advice for long-term investment money; keep your "powder "dry unless a specific value opportunity is available. Short term traders need to be cautious and alert. But don't hesitate to take advantage of market opportunities.
We did have our rally, but it was quick and disappointing. Gold spurted to its resistance at $ 650 per ounce, stalled, and then reversed back to $ 620 per ounce. The XAU index broke out, almost hit 150, and then pulled back to 138-140. Support for the yellow metal is at $ 615-620 per ounce and we closed yesterday (12/26/2006) at $ 627. Good support for the XAU is at 133-134 and we are currently at 139. Expect additional short-term weakness and an attempt to build a base at lower levels near previously mentioned support. Still a long term bull and just looking for good entry levels.
The opinions and commentary provided by the advisors in the My Automated Advisor Newsletter are the opinion of those advisors and not of My Automated Advisor.
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The Flight Log
As the 2006 market year comes to a close, the markets have had a great year. We saw the S&P 500 start the year at 1248, and as of this log entry...
The O. Report
Twas the night before Christmas,
and to investors’ great glee,
the markets were advancing,
to new high territory...