A Few Thoughts on Thursday’s Market: In looking at the charts from yesterday’s trading activity, I noticed continued weakness in the vast majority of the indices I track. The Dow Jones Industrial Average, Philly Semiconductor Index ‘SOX’, the S&P 100 ‘OEX’, S&P 500 ‘SPX’, the S&P Retail Index ‘RLX’, the M.S. Cyclicals ‘CYC’, and Amex Biotech ‘BTK’ indices all either hit or move lower through their 40 day moving averages. Again, this is generally considered a negative trading signal for the market. While the computers may initially move the market higher this morning due to the initial jobless claims numbers, I do not think they are going to overcome a slowing economy. Let us not forget that initial jobless claims, and the unemployment rate are lagging indicators. This means that they are providing us with a picture of what has already happened. They are not forward looking looking indicators which will provide you with an indication of what may be happening now or in the future. The initial jobless claims and the unemployment numbers are not providing us with a picture of an improving economy, they are confirming that the economy improved in the past. The forward looking indicators are showing a slowing economy. Economic conditions around the world are contracting, the world economy is slowing, and there is a good chance the U.S. economy will drop back into a recession in the next 6 months. This is not a recipe for a rising market with interest rates already at record levels.
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A Few Thoughts on Wednesday’s Market: In looking at the charts from yesterday’s trading activity I was struck by the apparent breakdown and weakness in the vast majority of the charts I looked at. While there is a good possibility several of these indices could bounce from these levels, another couple of down days will break the upward trend that has been in place since early summer and signal the start of a new downward trend. The charts of the various sector indices I track can be grouped into 3 basic categories. The 1st being the capitalization weighted tech indices that are very heavily weighted with Apple, Inc. ‘AAPL’. Due to the excessive weighting of Apple within these indices as Apple has moved lower, these indices have been dragged lower at a sharp paces. Basically a kind of “Live by the Sword, Die by the Sword” situation.
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A Couple of Thoughts After the Close: Following a roller coaster of a day, the Dow Jones Industrial Average finished the day just over 58 points lower to close at 12,446.88 It looks to me like the Dow is going…