1.11.08
Home Market Timing Weekly Updates Weekly Update Archives|
1/11.08
The meltdown continued this week with a weak attempt at a rally midweek. The rally ended right after Fed Chairman Bernanke testified that he was ready to aggressively cut interest rates in late January to head off a recession. The following day, selling was so intense that the Dow was down over 300 points before recovering to close with a loss of 246 points. When the market can’t rally on news of aggressive rate cuts, it does not bode well for the weeks ahead. In fact, if the rate cut is already factored in, which appears to be the case, there is little bullish news to look forward to in the short term.
We still have the bearish moving average crossover in the SPX, with the 50-day moving average now below the 200-day moving average. The difference between the two has continued to widen this past week. This makes the third straight weekly decline for the market. For those of you like statistics try these on for size. Since the end of October the market has given back 15 plus % in the COMP, the NDX, and the R2K. While the DOW and the SP500 have given back 11.27% and 10.32% respectively.
With the weakness in the dollar, it indicates that oil will continue to be expensive. The banks have gone from giving everyone a home loan; to now not giving anyone a loan unless they can prove that they don’t need it. So it looks like it will take quite a while to work thru the inventory of homes for sale.
Slowly some good things are starting to happen. Bank of America is buying Countrywide. That is like removing one of the burrs from under the saddle of the financial horse. It’s a start in the right direction.
Where do we go from here? We keep our powder dry, (in money markets) and wait for a good indicator.
Till next time\
Don
MTA Staff
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