Financial markets flash report

Financial markets flash report

Sep. 4
Stocks got hammered to the downside today in an across-the-board rout. The DOW closed down 345 points or 3 percent, to finish at 11,187. The S&P500 lost 38 points, also 3 percent, to close at 1236 and the NASDAQ closed 75 points or 3.2 percent lower, to stand at 2259.

All of our key short term support levels that we have been alerting you to have been broken to the downside and our major support levels of 1234 on the S&P500 and 11,128 on the DOW are within easy reach. We have a very important employment report out tomorrow that should be a market mover on the open.

Oil closed down $1.37 to $107.98 a barrel. This is the second day that oil prices fell and so did stock prices. As we have said before, in our view, lower oil prices at least in the short term, are bearish stocks as more and more people are starting to equate lower oil prices as an indication of a lessening global demand, which leads to negative global economic growth.

The employment numbers tomorrow will set the tone for the markets. The report is released at 7:30 AM CDT.

David R. Nielsen
President & Founder
Big Wave Advisors
630-682-5520
www.bigwaveadvisors.com
www.bigwaveresearch.com
Send comments to: dave@bigwaveadvisors.com

Sep. 3
Stocks closed mixed today as the DOW was like a ping pong ball bouncing between a down 60-point and up 30-point day. The DOW closed up 16 points to close at 11,532 but the broader based S&P500 closed down 2.60 points, as did the NASDAQ. The small-cap Russell 2000 closed higher. There were 1614 advancing issues and 1492 decliners so basically we can say it was pretty much an even day.

Oil closed lower again, but only by 32 cents to close at $109.39 a barrel. Most other commodities were mixed to lower. The 10 year Treasury bond yield fell under 3.7 percent for the first time in 5 months closing at 3.69 percent. The dollar was higher again across the board.

September is the worst month for stocks according to the Stock Traders Almanac. Big Wave Research went back and looked at research dating back to 1926 and found the Almanac dead on. Since 1926, September has averaged a decline of almost 1 percent. It is the only month to show a decline. We went back to more modern times to see how September performed since 1970 and here too, it averages a decline of a little over one-half percent and again, is the only month to average a decline. So one can conclude that September is indeed the worst month to own stocks.

Whether this September holds true to form is anyone's guess. But the odds are firmly in the bear's favor.

David R. Nielsen
President & Founder
Big Wave Advisors
630-682-5520
www.bigwaveadvisors.com
www.bigwaveresearch.com
Send comments to: dave@bigwaveadvisors.com

Sep. 2
Stocks experienced a wild ride today as they opened the session over 200 points higher and then closed lower on the day. This is what technicians call a key reversal day when a stock or index makes a new high within a trend and then reverses and closes lower. In this case today, the DOW reversed almost 300 points lower.

The DOW, S&P500 and NASDAQ all closed lower today. Oil, which was crushed yesterday during a special holiday session (which was historic in that a major exchange allowed a market to open on a holiday) and was crushed again today closing down over $5 a barrel to $110.16. This is the first time that oil prices closed below their 200 day moving average, again a key technical indicator and a sign of weakness. Our contact in the trading pits who called for crude to drop to $100 when it was trading at $145, is still thinking we will close under $90 a barrel and challenge the important $80 a barrel area before this trend is over.

Remember, we think that falling oil is NOT a positive economic event, it is in fact a negative one. Weak oil demand is a sign that world economies are contracting, not expanding and maybe today is the first sign that the markets are starting to realize this as well and the inverse relationship between oil prices and stock prices may be showing some strain.

Treasury bonds staged a huge rally in the afternoon, reflecting a flight to quality trade and the dollar also rallied big time against all major currencies accept the yen. Gold prices collapsed with most other commodities, dropping over $25 an ounce to close just above the important $800 an ounce level.

For the first trading day back from the long weekend, it certainly was a wild one.

David R. Nielsen
President & Founder
Big Wave Advisors
630-682-5520
www.bigwaveadvisors.com
www.bigwaveresearch.com
Send comments to: dave@bigwaveadvisors.com

Aug. 29
Stocks this afternoon are down sharply as traders take off early for the long Labor Day weekend. Volume is non-existent and this day is shaping up to be the slowest trading day of the year. This falls in line with the month of August, which will be in the books as one of the slowest trading volume months in over six years.

The DOW is down 100 points and all the other major averages are down a similar percentage. Oil is rising in the face of Hurricane Gustav, predicted to make landfall near New Orleans on lat Monday or early Tuesday as a category four storm. Most oil platforms out in the Gulf are now being evacuated and refinery operations could be halted for, at minimum, five days. The second Hurricane, Hannah, is expected to be a huge storm late next week and could hit eastern Florida. So there are some major weather related problems facing markets, especially energy.

Markets that rally on very low volume are historically known as "suckers" rallies. There is no power behind the move and therefore its very suspect. That is why usually in a bear market professional traders never sell a quiet or slow market because these markets usually rise on very low volumes. We suspect that the professional traders view this market in this light, and when they come back from the long weekend we will see volume picking up as well as the selling.

Have a great Labor Day break!

David R. Nielsen
President & Founder
Big Wave Advisors
630-682-5520
www.bigwaveadvisors.com
www.bigwaveresearch.com
Send comments to: dave@bigwaveadvisors.com

Aug. 28
Stocks moved up strongly today as the U.S. government reported that the economy grew in the 2nd quarter at a robust 3.3 percent rate. Inflation has slowed as well, coming in at a 1.9 percent 2nd quarter rate, or 4.2 percent annualized. This GDP number totally shocked economists who were looking for a 2.7 percent growth rate and represents the fastest economic growth in more than a year.

The bulls loved the report and took stocks higher from the open. The DOW closed higher by 212 points to stand at 11,715. The S&P500 rose 1.5 percent to close at 1300 and the NASDAQ and Russell 2000 were up as well, with the small-cap Russell up over 2 percent. For the year, the DOW and the S&P500 are down 12 percent but the small-cap Russell is only down 2.4 percent. Earlier this year most analysts were recommending over-weighting the large-cap blue chips and selling the small-cap Russell stocks. In hind site, that would have been exactly the wrong thing to do as the small-caps have outperformed the large caps again.

The market has violated our resistance levels we spoke of last night, so we need to give the bulls the benefit of the doubt here in the short term and see where this rally takes us. All of this upward movement has been done on very light volume, so it is suspect. But we still respect the charts and our price levels and the game has shifted today toward the bull's side.

David R. Nielsen
President & Founder
Big Wave Advisors
630-682-5520
www.bigwaveadvisors.com
www.bigwaveresearch.com
Send comments to: dave@bigwaveadvisors.com

Posted on Sunday, August 17, 2008 (Archive on Monday, January 01, 0001)
Posted by jstoltz Contributed by jstoltz

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