An unexpected rise in consumer confidence was reported as the catalyst for yesterday’s positive move in the markets. The professionals also continue to argue over whether we will have hyper-inflation or deflation. The fact is, no one has a crystal ball when it comes to market action. We look to the past, we look for chart patterns, we apply technical indicators and we examine company fundamentals to try and come up with an assessment of where the markets and individual stocks will go on a directional basis. Using a combination of fundamental and technical data, we come up with an educated “guess” of a possible target for an investment. This is just a dream. The only thing we can control when it comes to investing is the risk we take, and our actions in terms of when we buy or sell. Most financial advisors will tell you it is impossible to time the market, and often trot out various studies to prove their point. At the same time, there are numerous studies showing there is value in utilizing some technical criteria to time entries and exits. The best approach appears to be to use a combination of fundamental and technical analysis to make decisions. At the moment, there really has not been any significant improvement in economic fundamentals however the markets have been moving up since March. Why? It appears that the biggest factor currently moving the markets is a shift from extreme negative sentiment to positive sentiment. So what is sentiment? It represents the market psychology. Essentially, people are not feeling as negative about the economy and the markets. Consumer confidence is a sentiment related measure. So this adds another dimension to our market analysis. Not only do we need to have some fundamental criteria and technical criteria, but we need to gauge the overall sentiment of the market. Next week we will discuss criteria for each of these aspects to develop a selection criteria for identifying potential investments.
Futures this morning are mixed and the DAX is positive, indicating a flat open. The battle between the bears and the bulls continues with both the market bias indicators and the market condition scans showing neutral signals. The markets remain essentially status quo, in a bottoming market condition, with a sideways trend.
| Index | Change | %Change | Level | Phase |
| TSX | +292.48 | +2.93% | 10285.90 | Recovery |
| DJIA | +196.17 | +2.37% | 8437.49 | Recovery |
| Nasdaq | +58.42 | +3.45% | 1750.43 | Recovery |
| SP 500 | +23.33 | +2.63% | 910.33 | Recovery |
| Russell 2000 | +22.69 | +4.75% | 500.31 | Recovery |
| NYSE | +146.96 | +2.54% | 5936.58 | Recovery |
Source: Telechart
Short Term market outlook:
Bias: Scans showing a neutral bias
Energy: moderate to weak
Primary Trend: Remains down to sideways
| Sector | Phase |
| Consumer Staples | Recovery |
| Healthcare | Recovery |
| Technology | Recovery |
| Utilities | Recovery |
| Energy | Recovery |
| Financials | Recovery |
| Industrials | Recovery |
| Materials | Recovery |
| Consumer Discretionary | Recovery |
Source: Telechart
Posts
No comments:
Post a Comment