Which Way?

The Friday rally made the week easier to swallow for the bulls. The extremely light trade made a bottom tenuous, so the bear will be eager to sell any decent re-tracements. The great minds on wall street are looking for another rally to help salvage the mountain of bad trades created while trying to return alpha. The bears still have to close the market at lower levels and 08 bulls will be there to ease any fall. The interest rate markets are expecting lower rates again at the Fed's next meeting but stock markets will have to be making significant new lows for that to happen.

No Knock-Out

There was no knock-out punch from the bears last week but they are still lingering at the market's edge. The year's end is in sight and the bulls are hanging on to additional Fed relief and the thought that next year will see gains so why not buy now. The bear is looking more long term and seeing the mortgage issues as a heavy drag on the consumer/investor. The outcome will be something in the middle and it might be best for traders not to expect too much from these markets from here. Vol animals will have to be satisfied with what they have experienced over the last two and half months and expect less. The trend is still on the bull-side for now.

Bear at the Door

The bears are hoping to raise their flag if they can get another ugly down week. Tech, which all the other stock indexes had been tethered, got a dose of 'get out' from the professional side. As we stand, the NQ 100 cash is sitting 12.5% off of the August 16th reversal lows, with the SP500 cash plus 6% and the DJI sitting on a narrow plus 4%. Closes under the summer lows would provide the technical resistence area the bears could defend for some period of time. Relative to the other indexes, the tech play started back in June and as of late had left few opportunities. While Google and Apple are many times the face of the tech return stories, they become merely speculative trading stocks at the end of a run when values become stretched. They may catch late comers in those stocks with serious losses. The definition of a long term trader is one who is stuck with a loser. It may be the buy and hold crowd's turn to hang-on, but the bear's success will depend on tech.

Bears Still Waiting

The ability of the DJI and other indexes to avoid the death dive has led to much confusion in the bear camps. Now we like to poke fun at the bulls, but the bears seem to be perpetually abused by these markets. Each time we have seen the market on the brink of destruction, (Aug. 16th, Oct 22, and Nov. 1st) the final whack fails to appear. Comparisons to various years where hard breaks or crashes appear are being made daily. The credit crisis and the toll on banks and brokerages are claimed to be clear evidence of impending doom. Since economic strength in world financial markets is continually credited to the shaky global growth story, one cannot help but feel vulnerable to the downside. After all, global growth is all about commodity prices, and if anything can turn to crap quickly it is any commodity chart. But the bear's problems stem from their inability to close below levels, such as last springs lows, which will bring out meaningful liquidation and not merely downside volatility. Now the NQ has significant buying interest by managers simply for being a relative value play compared to other indexes. But interest in that market here and abroad is the overall reason the market downside has been limited. Turn the techs down hard and the bears may just get their break, otherwise forget it.