Market Outlook - January 20, 2009

Weekly Results:

S&P 500 850.12 -4.52% 
NASDAQ 1,529.33 -2.69% 
Russell 2000 466.45 -3.08% 
MSCI Emerging Markets 23.28 -6.47%

New Era! New Cycle?

The last six months have presented historical events for financial  participants. Yet, another watershed event awaits today.  Perhaps, a change in government leadership sets the stage for a cycle shift and trend reversal. That said, at this moment, not many compelling reasons for a sustainable recovery. In fact, the S&P 500 is down nearly 6%  in 2009.  To be fair, its rather early to judge. However, ongoing interventions and bailout packages remain unclear. At this point, negative economic and earnings results are not  much of a surprise. A low spirited signals are visible when viewing results from sentiment indicators (VIX and Put/Call Ratio). For that reason,  limited opportunities appear in select areas. Market reactions remind us that bubbles are still bursting in Commodities, Emerging Markets and Credit related groups. Again, trading prospects resurface in various forms given daily noise. In taking a step back one notices simple consolidation.

Plenty to Decipher:

The landscape for Financials continues to change as risk assessment becomes a challenging task. This puzzle is evident in figuring out the conditions of the Chinese economy and valuation of beaten up assets.  Additional rescue plans by the UK government raises more questions on the severity of credit weakness. The fallout from the bullish run of 2003-2007 is playing out and shapes the next cycle run. The Financial index (XLF) is approaching all-time lows from November 21, 2008.  Interestingly, Crude  and US 10 year yields are attempting to uniformly recover after making lows in late December.  Amazingly, a sharp and longer-term recovery in these themes is picking up momentum. As usual, betting on consensus alone does not tell the full story.

Stock Specific:

·         BLUD (Immucor) :  Presents attractive entry points closer or above $25.The maker of blood-testing equipment witnessed an increase in sales to $73 million. Momentum combined with core fundamentals present a bullish bias.
 
·         CELG (Celgene): Despite less than expected sales growth for 2009, stock price showcases relative strength. Secondly, a 35% earnings growth is  appealing for money managers.  Finally, the technicals signal a bottoming range between $50-55.
 
·         CREE (Cree Inc): Investors await further details from upcoming  earnings report. The long-term outlook of energy-efficient lighting seems promising.  A near-term sell-off around $14 permits buyers to step in.  The company stands to benefit from infrastructure spending as well as various government projects.

                                                                                          

KEY MACRO LEVELS:

Crude [$36.51] Flirting with a $10 range between $30 and $40. Overall downtrend requires additional time to shakeout. The lowest point in recent sell-off stands at $32.40 last reached on December 19, 2008.

Gold [$833.75] Strong base forming around $760. Heavy resistance at $880 and 30 points above its 200 day moving average.

DXY – US Dollar [84.21] The Dollar index maintains its uptrend that started in March 2008. During the global credit crisis, investors continue to view the dollar as a safe haven. In the short-term, there are increasing odds for a pause within a positive long-term move.

US 10 Year Yields [2.318%]  Near-term evidence suggests a  bottoming process between 2.03-2.20%.  Downside pressure exists given Fed’s uncertain policy. Nonetheless,  in the near-term, the best case scenario stands around 2.75% which is the current  50 day moving average.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

 

Market Thoughts – January 12, 2009

S&P 500 890.35 -4.45% 
NASDAQ 1,571.59 -3.71% 
Russell 2000 481.30 -4.85% 
MSCI Emerging Markets 24.89 -2.73%

Mixed View :

The first full week of 2009, reminded participants that positive trend indicators are temporary. In fact, a state of confusion floods this market where no-trend might be the new trend. This picture is painted in the pattern of broad indexes. For example, the S&P 500 remains in a trading range between 800-1000. In other words, it is a sideway pattern lacking major assurance. Perhaps, patience is greatly required for those investors eager to take directional bets. At the same time, Long-term investors continue to adjust to this environment. In forming an investment thesis there are increasing factors to digest.  Mainly, reactions to Fed's policy, economic outlook and pending stimulus package. Now, volatility increased last week by 9.26% reflecting further uncertainty. After a 50% fall from multi-year highs, the VIX (Volatility index) is poised to make a short-term run.

Overall economic and earnings outlook reinforce weakness. That said, the surprise factor appear less than previous months. At the same time, credit markets appear to briefly stabilize. The TED Spread, a barometer for credit risk declined from 4.65% to 1.25% in the past few months. Similarly, the number of stocks making new lows declined signaling a positive technical outlook. Of course, in both cases these results are based on retracement from historic levels.  Now, balancing  these data points presents select short-lived opportunities. As we complete a seasonally favorable period, markets will face several tests in weeks ahead. Momentum signals argue for pullbacks from current levels. Perhaps, this makes sense, given the 20+% increase for stocks since November lows. In addition, not manycompelling reasons for skeptical buyers. Nonetheless, the faith in a major market bounce depends on confidence and a series of catalysts.

Sector/ Groups:

Healthcare and technology are seeing inflow versus financials and energy. Market cycles suggest that previous leaders can consolidate for an extended period. In looking ahead, the combination of improvement in credit markets and cheap valuations create opportunities in select areas. These theme are visible in Biotech where M&A deals are tempting for larger companies.  

Biotech: BLUD (Immucor), GENZ (Genzyme), and CELG (Celgene).

Technology:  Speculative Small Cap Ideas:

ASEI ( American Science and Engineering) : Provider of scanning, inspection and X-ray equipment mainly for government securities. Positive stock  momentum especially in the past six months. Pullbacks in the near-term around $70 offer favorable entry points.

SXE (Stanley, Inc) : Shares have stabilized near $30. Company benefits from defense and technology spending. Sustainable fundamentals given the macro climate and relative strength.

NCIT (NCI Inc): Recently made new 52 week highs showcasing . Revenue and EPS growth justify the positive stock performance. At these levels, one can expect sell-offs. Importantly, companies organic growth creates value for longer-term holders.

 

MACRO LEVELS:

Crude [$40.83] Extended in the near-term after reaching $50.47 on January 6^th.  Based on recent trading pattern, increasing odds for the index  to trade between $36-$48.

Gold [$847.25] Pausing at 200 day moving average of 855.23. Long-term outlook suggests a downtrend and pullbacks in the near-term.

US 10 Year Yield [2.39%]  An early bottom forming in yields. Attempting to stay above 2.20% and a potential retest of 2008 lows of 2.03%.

DXY – US Dollar Index [ 82.66] Re-acceleration to a positive trend that started in March 2008. Holding around 80, this serves as a key base in the current cycle.

S&P 500: [890.35] 3+ month trading range stands in between 800-1000. Currently trading at mid pointlevels, in which the 50 day average stands at 888.75.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Outlook | January 5, 2009

Weekly Results:

S&P 500 931.80 +7.33%
NASDAQ 1,632.21 +7.04%
Russell 2000 505.82 +7.51%
MSCI Emerging Markets 25.59 +6.93%

Early Optimism:

Markets appear to ignore bad news. Ideally, a fresh start creates optimism and is visible in recent upside move. Meanwhile, confidence restoration is vitally needed and worth monitoring this quarter. That said, few indicators have briefly stabilized from extreme levels. It's natural to hope for mean-reversion and currently that theory is picking up momentum. In fact, the global relief rally started before Thanksgiving. Since late November, S&P 500 rallied 25% from annual lows of 741.02. Similarly, (EEM) MSCI Emerging Markets fund is up over 30% from November 20^th lows. This short-term rally faces challenges with pending economic and earnings data.

Forces supporting recent rally:

1. Sharp decline in volatility

2. Federal Reserves policy favors riskier assets

3. Technicals and valuations signal "cheap"

4. Sentiment is retracing from extreme readings

5. Seasonal rally and new outlook

Balancing Act:

The trends above reflect short-term observations. Clearly, the VIX (volatility index) has calmed down towards the end of 2008. Nonetheless, the index is twice above September 2008. This showcases a changing landscape for the upcoming cycle. In addition, this states that more uncertainty exists in the marketplace. For example, cash levels remain high as investors wait to place aggressive bets.

The $8.85 trillion held in cash, bank deposits and money-market funds is equal to 74% of the market value of US companies, the highest ratio since 1990. (Federal Reserve data compiled by Leuthold Group and Bloomberg)

IDEAS:

Financials:

WRB (W.R. Berkley): Stock worth revisiting on pullbacks, given attractive relative strength and positioning in its core business of property casualty insurance. A move below $28 offers buying opportunities.

Infrastructure/ Water:

WTR (Aqua America): Company is showing strength and a few points removed from a 52 week high. Infrastructure spending and healthy credit conditions bode well.

Healthcare:

GENZ (Genzyme), CELG (Celgene), MHS (Medco) and BLUD (Immucor)

Macro Levels:

Crude [$46.34]: Attempting to recover. Overall, weekly data continues to decline with no strong evidence of a turnaround. The 10 day moving average stands at 51.77 followed by heavy resistance at $60.

Gold [ 874.50]: Pausing after a multi-week upside run. Long-term perspective suggests a positive momentum above $800. Index is 13.5% removed from all-time highs.

US 10 Year Yield [2.36%] Double bottom forming after spike lows on December 18 (2.03%) and December 29 (2.04%). Technical improvements suggest early recovery in yields.

US Dollar DXY [81.83] Basing around $80. Uptrend remains positive despite recent sell-offs.

S&P 500 [931.80] A noticeable sideway pattern since September's decline. Overbought in the near-term. Key support at a 50 day moving average of 886.79.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Thoughts | December 29, 2008

Weekly results:

S&P 500 872.80 -1.41%
NASDAQ 1,530.24 -1.43%
Russell 2000 476.77 -.50%
MSCI Emerging Markets 22.93 -6.51%


Few thoughts and questions. A historic year Indeed! A Happy, Healthy and Fruitful year to all!!

Times of general calamity and confusion create great minds. The purest ore is produced from the hottest furnace, and the brightest thunderbolt is elicited from the darkest storms. Charles Caleb Colton ((1780 - 1832)

Synchronized Sinking Second half of 2008

Usually, seeking extremes and betting on reversal is a well practiced strategy. Once, an unusual move is identified, next step is to seek catalyst for a trend. After examining risks the trader lets the market do the rest. Today, most asset classes and global markets are lower and at or near some extremes. Generally, movements in less correlated assets leads to market dislocations. That attracts different opinions between buyers and sellers. Now this basic concept does not seem too obvious given recent downturn.

What are the odds for a uniform recovery? Perhaps, a rise in Crude, US Dollar, Real Estate, and Stocks. Sounds rather silly and too risky. Interestingly, few envisioned a decline in all asset classes in the fall of 2007. In fact, most market experts did not envision a simultaneous decline in Oil and S&P 500. Finally, the argument for diversification was based on correlation. These abnormal and historic times tested conventional wisdom. Again, a message for markets to fathom the unfathomable.


No Trend or New Trend:

Increasing volatility and inter-linked markets increase demand for financial products, extended trading hours and faster trading tools. On one hand, financial system's core is being tested. At the same time, innovations and technical expertise are in high demand. It's rather awkward for those reading latest news headlines. Nonetheless, the human desire to innovate, to speculate and to grow is a powerful force. These lessons are visible in across various eras and time frames.

Non-U.S. index markets (and of course) currency markets are available for trading outside of the cash session period for U.S. equity markets. However, financial markets continue to become more global and directly correlated all the time. That trend will only continue, at a faster pace than ever before. A growing number of traders around the world will continue flowing into the U.S. markets during off-peak hours. That continual trend will in turn make trading the globex periods more active and fruitful. It's a self-perpetuating trend. (Austin Passamonte - Trading Markets Dec 2008)

An extended period of sideways markets appear strange especially for recent participants. Nonetheless, evolution in global markets have slowly changed the landscape. This year, ongoing intervention and implementation of government policies have formed new investment vehicles. In other words, plenty of products to learn, trade and improve. This creation can serve as an upside catalyst for the next bullish run. Ironically, the outcry for regulation enables a new market for eager investors. Of course, the faith of this resides in investor confidence. Again, in due time as cycles teach us that recoveries are inevitable.

Clients have diverse needs, risk appetite and return requirements. Wealth managers are needed more than ever before. But the new tasks are more demanding and require better education and training. There is a demand for better-equipped wealth managers in a globalised world of finance. Finance and banking are very necessary in our modern world, but now they require more knowledge than before. More education is required, not less. (Francis Koh and Klaus Spremann - The Business Times on December 22, 2008)

Market Mechanics:

Lightly traded volume but similar message in the past few weeks. Mainly, some improvements in sentiment, and declining volatility. Of course, the economic data is slowing. Mainly, this early bottom presents an opportunity to distinguish various themes. Some will prefer to sit on sidelines, for further evidence. Those seeking higher risk/reward are considering entry points in this consolidation phase. Again, the Federal Reserves recent move is designed to increase investors risk appetite. First quarter, can provide further clues to the depth of economic concern and impact of bailout plans.

Ideas:

Healthcare: Sector stands to benefit in pending cycle based on relative strength, fundamental outlook and favorable government policy.

GENZ (Genzyme), CELG (Celgene), MHS (Medco) and BLUD (Immucor)

Financials: Exchanges are poised to benefit from increasing trading activity and introduction of new products. Also, deeply oversold at these levels and worth a look. Further sell-offs in CME (CME Group) presents entry points especially a move below 2008 lows of 155.49 present entry points.

KEY MACRO LEVELS:

Gold [843.50] Index failed to move above its 50 day moving average since April 2008. Currently, facing key resistance around 870-900 following a rally from October lows.

Crude [37.71] Down 78% from annual peak to intra-day lows. Attempting to stabilize with a new range forming between $30-40.

S&P 500 [872.80] Potential bottom near 800. Technically, oversold as seen by rally from November 21.

DXY - US Dollar [80.89] Giving up gains from a multi-month rally. Staying above 200 day moving average of 77.10. Again, reaction to Federal Reserve policies attribute to recent moves. Major support at 78.

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Dear Readers:
The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Outlook | December 22, 2008

Weekly Result:

S&P 500 887.88 +.93%
DJIA 8,579.11 -.59%
NASDAQ 1,564.32 +1.53%
MSCI Emerging Markets 25.39 +3.98%

Year-end Reflection:

For some, reaching a closure to this year is a major relief. Clearly, a historic and violent year. Now, few participants benefited by mostly betting against cycles relating to Crude, China and Credit. In short, a lesson-filled year. In ugly times, participants examined the core of the credit system, impact of emotional response and role of government in financial systems. Perhaps, a natural market process driven by psychology. This leads to the importance of trust restoration which is a key foundation for the next cycle upturn. The past four months showcased intense action which should spillover into 2009. In looking ahead, major driving forces are bailout implementations, increase in risk appetite and shift of investor sentiment.

Positioning for first quarter:

"The newspapers may be giving us a parade of bad news, but the stock market is beginning to march to a different drummer," Richard Russell (Dow Theory Letters).

At this point, participants are accustomed to forced and panic selling. Basically, pessimism has reached new extremes and is setting up for reversal. Last week, Fed's policy of lower rates set the stage for a turnaround in risk-assessment. Again, time is required for markets and investors to digest the impact. Trading behavior in the next 2-3 weeks might not provide much desired clues. Being an optimist has gained slightly more votes than previous weeks. Option expiration combined with decline in volatility contribute to a positive week. Volatility Index (VIX) declined 17% for the week and is down over 50% since October's peak. This reinforces improvements in technicals and sentiment data. Similarly, credit markets are stabilizing as seen by a 43 basis point TED Spread decline. As for the sustainability of these indicators, they remain questionable.

Strategy :

Interestingly, global assets remain cheap and highly correlated since the summer months. Therefore, relying on pure valuation might not be enough for a turnaround. For odd makers, temptation is growing to add exposure in Crude, Small Cap and Emerging Markets. Again, Macro drivers have to line up with basic fundamentals for bottom formation. Amazingly, an irrational rally is not out of the question either. Especially, in a period where the Federal Reserve is encouraging activity. As money managers adjust in the deleveraging process this creates demand for quality assets. Therefore, this creates additional challenge in identifying the "right" price.

Finding themes in 2009, can be rewarding for years ahead. Most companies are forced to reexamine their business model. That said, Healthcare is appealing on technical, fundamentals and political outlook. So far this year, the sector dominates M&A activities. Medical Devices: 32 deals, worth $525.80 million Biotechnology: 18 deals, $468.20 million Pharmaceuticals: 19 deals, $430.43 million. iiBIG (International Institute for Business Information & Growth) Dec 9, 2008.

MACRO LEVELS:

Crude [33.87] : Testing new annual lows after a 75% decline since annual highs of $147. Long-term view suggests major support at $20. Technical's suggest an oversold bounce with lack of sustainability.

Gold [835.75] : Stabilizing with a tight range between 720 and 840. That said, longer-term trend is in a consolidation phase. Holding above $700 which serves as a support level confirming positive trend.

US 10 Year Yield [2.12%]: Similar to Crude, yields reached new lows on December 19 (2.03%). At this point, of extreme lows a sharp bounce is plausible. Charts point to a potential upside rally around 2.51% (near 15 day moving average).

US Dollar DXY [81.29] Sharp decline since late November after a 6+ month rally. Holding above 78 and becoming oversold. Index remains above 76 near its 200 moving day average.

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The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Observations - December 15, 2008

Weekly Results:

S&P 500 879.73 +.42% 
NASDAQ 1,540.72 +2.08% 
Russell 2000 468.43 +1.59% 
MSCI Emerging Markets 24.42 +11.28%

Relatively a calmer week given turbulent reactions in recent months. With few days left in 2008, participants are digesting the historical results of capital destruction while bracing for a changing and unknown landscape. For the most part, risk-aversion has been a popularapproach. That's understandable, especially following a cycle top highlighted by mismanaged risks and increasing interventions. At this point, the challenge is identifying how much of the bad news is reflected in sentiment data. Again investors are accustomed to facts relating to weak economic outlook, less consumer spending and bruised global confidence. Financials continue to struggle and have not recovered as expected by many optimist. Similarly, dislocation in credit markets is extending to municipal bonds. Yet another reminder of investor anxiety.  Nonetheless, examining positive symptoms is more vital now than in other periods.

Now, there are early signals of a bottoming process, which are visible in few areas. Observers wonder if October set the lows for recent sell-offs. For example, October 24^th marked Gold's lowest point. Similarly, on the same day the VIX (volatility index). saw its annual highs. Correspondingly, late November witnessed spike lows in S&P 500 and a top in the US dollar. Clearly, these hints alone might not be enough to encourage managers to increase overall risk appetite. Nonetheless, these macro patterns spur thoughts and increase perceived convictions. In addition, these Technical's can impact  investor psychology and willingness to participate.

Perspective on a bottoming process:

·         "Based on the outperformance of emerging-market stocks and the sharp recovery of commodity-related groups, it would appear that investors are becoming less risk averse. Another example is the outperformance of small caps since the November 20 lows." (Bespoke Investments – December 8).

·         "On top of everything else, Lowry's Selling Pressure Index dropped substantially yesterday [Wednesday] and is now in a definite declining trend. At the same time, Lowry's Buying Power Index is trending higher. Thus, the odds are saying that the trend of the stock market is turning up."  (Richard Russell-Dow Theory Letters- December 2008)

·         "Companies in the S&P 500 Index are marking down assets at the fastest rate in six years, leaving operating profits 46% higher than net income in the third quarter, a level last seen in 2003 when the previous bull market began. The ballooning gap between net income net income and operating profit suggests companies are getting rid of their weakest businesses, setting the stage for a recovery in stocks next year." (http://hedgefundmgr.blogspot.com)

The Week Ahead:

In looking ahead, the action of the Federal Reserve will be highly monitored, but might not surprise. In addition, option expatriation can create trading noise forcing participants to throw in the towel for 2008. For active participants, the direction of volatility should influence overall behavior.                                   

On a sector basis, Biotech is relatively attractive as shown by its strength versus the broad markets. For long-term investors this cycle shift creates fundamental entry points. Factors for an upward bias include, M&A activity, promising innovations and spending cycle.

Macro Levels:

Crude [46.28] : After setting annual lows of 40.50 on December 5, there are signs of a recovery. The 200 day moving average is too far removed at $104.  A sharp rally to $60 can present short term opportunity. Yet, this does not negate the established downtrend of commodity related themes.

Gold [826.50] A 16% rally since October lows after an extreme oversold readings. Currently heavy resistance ahead around $860-880 range.

US 10 Year Yield [2.57%]  Flirting with all-time lows around 2.50%. Forming new trading range developing between 2.45 and 3%.

US Dollar DXY [83.64%] Pausing after a 6 + month run and extended in the near-term. Trend remains positive  above 80.

S&P 500 [879.73] A key test around the 900 range which is near the 50 day moving average of 909.80. Secondly, index is poised for sideway trading within 800-1000.

Market Review | December 8, 2008

Weekly Results:

S&P 500 876.07 -2.25% 
DJIA 8,635.42 -2.19% 
NASDAQ 1,509.31 -1.71% 
MSCI Emerging Markets 21.94 -3.94%

Grasping this moment:

A strange period, where short and long investors are uncomfortable. Equally unique is the a uniform relationships between markets. The past few months have witnessed high correlation  among asset classes. Nonetheless, cycle declines are part of nature. Now, we've reached a point where bad news is an accepted norm. In other words, all types of historical marks have been tested.  Usually, that's a bullish indicator given the excess of overselling.  For example, ISM index fell to 36.2 the lowest level since 1982. Meanwhile, Crude had its worst weekly performance since the early 90's. Increasing headlines showcase pessimism and sentiment data matches that point.

Plenty of unknowns:

Additionally, investors are attempting to figure out the  impact of government assistance. That serves as a wild card for risk assessment. It's reported that the bailout accounts for 60% of GDP.  Yet again, the lack of clarity in governments plan contributes to  growing uncertainty. Similarly, globally coordinated interest rate cuts have become a common theme. Now, there is a disagreement on timing a market bottom, but a unanimous agreement that things should get worse.  This past Friday, unemployment data confirmed and emphasized  the established economic weakness. This sets the stage for a Federal Reserve rate cut. Perhaps, that can fuel optimism and serve as the next key macro event. 

Trading Mechanics:

Trend following has narrowed to a shorter time frame. Perhaps, this is not the ideal way to manage money especially when majority of assets favor a  longer term outlook. Meanwhile, fundamental bets require patience for  calmer entry points. These factors partially explain the uncommitted capital that's on the sidelines. In other words, trendless and lack of conviction. Several factors lead to a system disruption such as hedge fund redemptions.

Connective Capital, a Palo Alto, California-based hedge fund, treated investors in its short strategy to an eye-popping 85 percent gain this year as its benchmark Nasdaq Index slumped 42 percent. Still, clients asked manager Robert Romero to return roughly 20 percent of their capital.." (Reuters -12-5-2008)

Levels:

The S&P 500 is holding above November lows of 741.02. From a technical view, any strength above those lows is positive. This assumes that the next round of selling is not too severe. As Crude trades near $40, it has one wondering if the next major support is closer to $20. At this point, even bears are reconsidering if the commodity is too cheap.  Interestingly, spike lows for US 10 Year Yields and Crude were tested on Friday.  On the other hand, Dollar strength is holding in as Gold remains in a tight trading range (712-800).

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Review | 12.01.2008

Weekly Results:

S&P 500 896.24 +19.11%

NASDAQ 1,535.57 +16.67%

Russell 2000 473.14 +22.80%

MSCI Emerging Markets 22.84 +19.58%

A Dose of Optimism:

Although, the current geopolitical climate appears unstable; global stock markets briefly rallied. In the past six months, a dose of optimism has resulted in costly returns. Perhaps, mean-reversion appears overdue but remains a tricky game. Interestingly, during market tops and bottoms, many have realized that holding positions for an extended period is too risky. Some pundits are placing their wagers for a market bottom in 2009.Opinions do vary across the spectrum in identifying optimal entry points.

How low can we go? Evidently, bears are not looking to aggressively bet against beaten up markets. Last week, short-covering was visible. Interestingly, stocks trading above their 50 day moving average improved to 19%. Also participants are contemplating if current performance is discounting worst case scenarios. When you put these factors together maybe the downside pressure is close to subsidizing. Simply, investors are realizing that reducing exposure and shorting time frame is required. Another key point to consider is the unusual market flow given liquidation and adjustments in the system.

Within a cycle breakdown its possible to see a temporary rally. For example, Financials and Homebuilders rose nearly 50+% last week . Overall recovery was fueled by bailout packages. For optimists, these issues showcase a glimpse of hope. A positive indication was seen in a sharp VIX (Volatility Index) decline. The index fell 31% for the week. Importantly, the announcement of economic team by the new administration provides some needed comfort. In the past few years, this part of year has been favorable for a market recovery. Clearly, this is a challenging atmosphere from various historical prospective. Therefore, grasping the near-term vs. long-term flow of markets is a critical part of decision making.

Not Yet ---Evidence needed

Generally, further downside moves seems to match broad expectations. Last week, Goldman cut its EPS estimate for S&P 500 to $55. Similarly, Citigroup reduced its index expectations to 850 from 1200. Finally, 3rd quarter expectations are much lower as well. Investors can be discouraged to participate based on psychologically. On the other hand, market bottoms take on a different shape that is not expected by most. Combining these factors set the stage for a confusing environment. In the week ahead, few earnings and non-farm payroll data can provide some clues or confirmation. Again, implementation of government relief programs is yet to be fully discovered.

"While Wall Street analysts are typically known for being overly optimistic, based on at least one measure, they have never been less bullish. According to Bloomberg statistics that track analyst buy, sell, and hold ratings, only 36% of all ratings are currently buys. This is the lowest level since at least 1997, and significantly lower than the 75% level we saw in 1997 and 2000. (Bespoke Investments – 11.25.2008)

The macro picture reminds us that distrust and a lack of confidence exists across equity and credit markets. This remains the essential factor to spark a positive momentum. At this point, participants are too skeptical and are willing to wait for upside confirmations.The wait and see game can be a difficult part of this process is. In fact, that's where trading can be dangerous and risking capital is less worthwhile. Eventually, odds are increasing for a pent up bullish run. Nonetheless, capital inflow is a prevailing theme that's difficult to ignore.

"Investors Pull Record $179.6 Billion from Equity Funds in Past Three Months" (TrimTabs – Nov 30, 2008)

MACRO LEVELS:

Crude: [$54.43] Attempting to bottom from November 21st lows of $48.25. Currently, its trading near 15 day moving average with negative weekly trend.

Gold [$814.59] Multi-week trend suggests an early signal of stabilization. Next key level on the upside is 873.62 which is the 200 day moving average. A pullback in US dollar and lower rates could influence a higher move in Gold.

US 10 Year Treasury [2.92%] Yields have dropped nearly 30% since October 15 2008. 2.20% is the lowest historical point reached in 1949.

DXY – US Dollar [88.46] After a strong 6 month performance, the currency is pausing its positive momentum. A peak on November 21 of 88.46 appear to have set the stage for pullbacks.

S&P 500 Index [896.24] Key trading range forming between 800-1000. Interestingly, the index broke below 2002 lows and rebounded from oversold conditions.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Update | Nov 24, 2008

Weekly Results:

S&P 500 800.03 -8.39% 

NASDAQ 1,384.35 -8.73% 

Russell 2000 406.54 -10.95% 

MSCI Emerging Markets 20.22 -10.71%

 

Bailouts and intervention are increasingly playing a major role. This weekend's bailout of Citigroup can create some near-term recovery.  Overall, confidence restoration is not fully visible among participants. Clearly, various asset classes are oversold but too short term oriented.

Calling bottoms and selecting stocks seems too risky for market participants. Again, these lessons keep repeating in a period of turbulence. Weekly declines partially describe the full story as the S&P is down 45% year-to-date. Credit fears and a worsening economy continue to paint and reinforce the current condition. Generally, market extremes are poised for mean-reversion. Despite, growing pessimism the market dislocation has yet to recover. From various perspective, investors have noticed that stocks are cheap. Interestingly, various headlines point out the historical magnitude of recent performance. Crude is below $50 and VIX is above 70. Perhaps, this relationship paints the picture of a new era. In addition, the S&P 500 broke below 2002 levels of 768. This serves as a key mark for cycle observers by confirming the downturn in this cycle correction.

"The lowering of the Fed funds rate, the Fed's innovative programs to provide liquidity to financial institutions and more lenient rules for borrowing through the discount window appear to have exhausted the gamut of possibilities routed through monetary policy changes to influence aggregate demand." Asha Bangalore (Northern Trust)

The fear in credit markets and de-leveraging processes are greatly impacting the dynamics of trading. For bargain hunters, select opportunities appear tempting on a historical basis. On the other hand, this is a difficult environment for long-term buyers. Stabilization is desperately required given increasing default risk and forced selling. In picking stocks, investors face multiple variables that create a difficult trading environment. That said, more patience is needed. Managing risk has become a  labor intensive process with undefined trends. Thus, mapping out a 3-6 month investing plan presents a very high risk/reward. Nonetheless, a furious recovery is possible given that the S&P 500 is 35% removed from its 200 day moving average.

Interesting Perspective:

"The dividend yield on the S&P 500 is now greater than the yield on the 10-year Treasury. That hasn't happened since 1958".(Barrons 11-24-2008)

Macro Levels:

Crude [ $49.93] : Downside momentum building after breaking below $60. Next significant range around $40, last reached in 2004. 

Gold [$774.50] Early signs of bottoming between $712-750 range. Again, the long-term trend does not showcase an entry point.

US 10 Year Yield [3.19%] Sharp drop-off resulting in a 54 basis points weekly decline.  US 10 Year Yield broke below several support levels and  reaching  5 ½ year lows.

DXY – US Dollar [88.19] Strength developing after established lows in mid March. Next support around 84.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Review | Nov 17, 2008

Weekly Results:

S&P 500 873.29 -6.20%
NASDAQ 1,516.85 -7.93%
Russell 2000 456.52 -9.74%
MSCI Emerging Markets 22.64 -7.13%

Overall investor anxiety has yet to settle especially with unknown policies ahead. This creates a challenging atmosphere for identifying long-term ideas. Interestingly, there is no shortage of headline materials at this stage of the consolidation phase. Key discussion points include reactions of G20 meetings, senate testimonies and implementations of existing bailouts. Most participants are watching events more than capturing sustainable trends. A rise of 18.20% in (VIX Volatility Index) partially tells the story of turbulent trading patterns.

Clearly, it's hard to deny established downtrend given the violent nature of market moves. Even pure fundamentalist are leaning towards technicals for some answers. Unfortunately, markets appear too correlated and are moving in a similar direction. Much attention is being paid to fallout results more than to promising outlooks. Although, some trading days remind us that expecting mean reversion can be misleading. That's serves as an ongoing lesson of this historical cycle peak. Simply, this dislocation of a non-trending and fear driven markets make new extremes appear like the norm. This is reflected across various asset classes ranging from Commodities to Real Estate. At this point, not many places to hide given risk aversion among most investors.. For example, money market funds have risen by 20.3% year-to-date.

Corporate liquidity is awful. Announced corporate buying was below $6 billion in each of the past seven weeks even though the S&P 500 plunged 24.6% in this seven-week period. Also, insider buying in the past two months totaled $3.4 billion, down 24% from $4.5 billion in the same period last year. The best-informed market participants are signaling that stock prices have further to fall. (Trim Tabs – November 17, 2008).

In this deleveraging phase, it takes time to restore confidence and accept new emerging themes. For optimist, making long bets has been costly since entry points. Similarly, rotational opportunities into other sectors are not quite clear. Simply, more patience is required to find attractive entry points.

MACRO LEVELS:

Crude [$57.04] Recovering from annual lows of $54.67. Oversold in the near-term, but downtrend established as defined by a break below $80.

Gold [$747.50] Several weeks of consolidation between $720-760 ranges. No signs of trend reversal, as the commodity peaked in March ($1011) and failed to make new highs in July 2008.

US 10 Year Yields [ 3.73%] Over two month of uptrend intact. A key support level developing around 3.65%.

DXY – US Dollar [86.36] New multi-year highs reached again this week at 88.14. This reinforces positive momentum from March lows for the index.

S&P 500 [873.29] Early signs of stabilization, as charts demonstrate a new range within 800-1000. Much attention will be focused on November 13th lows of 818.69. Interestingly, S&P 500 is few points away from previous cycle lows of 768.63 in 2002.
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The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Thoughts - November 11, 2008

Weekly Results:

S&P 500 930.99 -3.90%
DJIA 8,943.81 -4.1%
NASDAQ 1,647.40 -4.27%
Russell 2000 505.79 -5.90%
MSCI Emerging Markets 24.38 -2.84%

A historical year given election results, credit collapse and increasing global interventions. At this junction, there is a convergence between the business and political cycle.

In terms of the business cycle, contraction and deleveraging are th domeinant subjects. Of course, economic declines are becoming the norm as most readjust expectations. Last week, additional data points from Institute for Supply Chain Management and Non-Farm payroll confirmed the cycle downturn. A new political environment shapes the long-term outlook, mainly based on budget spending and job creation. On the other hand, investors continue to speculate on emergence of new sector and cycles. Now, this transition in leadership creates a challenging trading arena. Especially, with near-term turbulence for those betting on themes. In due time, increased intra-day swings should stabilize. At this point it is too early to call.

In looking ahead, the cycle fallout has expanded from intervention to collaboration. Perhaps, G20 meetings can restore some confidence. In some cases, markets have priced in worst case scenarios. Similarly, Fed Funds futures imply a 97% chance of 50 bps rate cut for December 16th. That said, inflow among equity funds increase by $2,186 million last week, which showcases some signs of optimism (Trimtabs).

There are two key components of long-term equity returns: dividend (or profits) growth and valuation changes. In the second half of the 20th century, equity returns were given an enormous boost by higher valuations. In the past eight years, they have taken a savage hit, despite the growth in economic output and corporate profits, as valuations have returned to normal. (The Economist –November 6, 2008)

The next few months might not provide clear trends as desired by most investors. Through these macro inflection points, equity managers are reshuffling portfolio's. Recent behaviors also remind investors the importance of cutting losses. The lack of clarity lead to turbulence and disruption of flow. Again, VIX is forming a new trading range above 50. In fact, the combination of near-term uncertainty and bargain hunting create a puzzle. Analysts will most likely lower their earnings expectations and an additional downside move can provide optimal entry points.

The past few years Technology, Media Telecom and Healthcare have been neglected sectors and are poised to lead on a relative basis.

Stock Specific Ideas:

Healthcare:
KG (King Pharma), TECH (Techne), BLUD (Immucor) and GENZ (Genzyme)

Technology:
ORCL (Oracle), ATVI (Activision) and CREE (Cree Inc)

Macro Indicators:

Crude [$61.04] Holding slightly above yearly lows of $59.97. Major support around $60, which marked a key level in 2007.

Gold [$735.25] Established downtrend since mid spring highs. Attempting to bottom with $700 serving as a support level.

US 10 Year Yield [3.79%] Early indication of an uptrend in yields. Since, September 16th yields have jumped from 3.24% to 3.79%.

US Dollar –DXY [85.90] Multi-month momentum remains positive as confirmed by upside move from $76 to $85.

S&P 500 [930.99] New range developing between 839-100. Overall, volume has declined since October. Nonetheless, heavy resistance around 1000.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

Market Review - November 3, 2008

Weekly Results:

S&P 500 968.75 +10.49%
NASDAQ 1,720.95 +10.88%
Russell 2000 537.52 +14.09%
MSCI Emerging Markets 25.09 +24.11%

Big Picture:

As oddmakers begin to speculate on election results, the overall market conditions appear equally puzzling. Clearly, election results will shape policies and longer-term trends. That said, this cycle correction is ongoing and requires additional time. Similarly, one can expect a short-term market reaction in markets. Generally, knee- jerk trading responses do not necessarily indicate overall multi-year trend. Meanwhile, impact of interventions and search of bottoms heighten the degree of 'unknowns'. In addition to the election, further earnings and economic data can provide additional clues to "jittery" markets.

Seasonal/ Cycle Factors:

As we enter November, increase in market volatility, worsening economic conditions and beaten-up stock market are clearly evident. Outside of political landscape, the cycle outlook suggests favorable atmosphere for sectors related to healthcare and technology. Unfortunately, as the downtrend continues, investors are forced to closely monitor entry and exit points. Recent weeks, have seen major shifts towards extreme negative sentiment. The current environment continues to witness large swings and lack of longer-term commitment. Historically, this October was the 8th worst monthly performance for the S&P 500 (-16%). Interestingly, the last three months of the year have produced positive returns. From a macro viewpoint, we are entering an era of de-leveraging. This adjustment process is yet to be resolved in financial systems.

Portfolio/ Trading:

Given steep declines, several pundits have pointed out available bargains in equity markets. In fact, as risk appetite eventually increases there are opportunities to accumulate quality stocks. In addition, mean-reversion trades seem highly probable but require short-term management. Generally, investor fear creates panic and overselling. Timing the market is the ultimate challenge, but valuations signal a buy point. Nonetheless, restoring natural flow of markets and stabilization in credit markets are desperately needed.

In a market that has become undervalued, however, the strategy of waiting for a measurable improvement in market action historically has not performed nearly as well as a strategy of gradually increasing market exposure, on declines, as the market's valuation improves. Scaling in that way is certainly not comfortable, but the willingness to experience short-term discomfort is a scarce and ultimately well-compensated resource on Wall Street. The key is to scale gradually and in proportion to the expected return profile, rather than trying to "time" reversals that can't be predicted. (John P. Hussman - Risk Management and Hooke's Law - October 27, 2008)

Investment Ideas: Innovative related themes present select buying opportunities. Improving fundamentals and relative strength bode well for upcoming bullish cycle.

Healthcare:

GENZ (Genzyme), BLUD (Immucor), STE (Steris) and TECH (Techne)

Technology:

ORCL (Oracle), COMS (3Com) FORM (Formfactor Inc) and EMC (EMC Corp)

Macro Levels:

Crude: [$67.81] :Reverting back to 2007 levels, with next major support around $50. Specifically, Crude reached similar low on January 17^th 2007 of $49.90.

Gold [730.35]: Attempting to bottom near $700. Established downtrend since March 2008 highs. This October marked annual lows of $712.50 as the commodity declined over 25% since mid-July.

US 10 Year Yield [3.96%]: Trading at a narrow range between 3.80-4%. Yields have risen 22% since September 16^th lows .

DXY- US Dollar [85.63] : Recovering and holding above a key level of $84.

S&P 500 [968.75]: Consolidating between 850-1000. Early hints of stabilization after sharp declines.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the futurinvestment performance of any securities or strategies discussed.

Market Thoughts - October 27, 2008

Weekly Results:

S&P 500 876.77 -6.78%
DJIA 8,378.95 -5.35%
NASDAQ 1,552.03 -9.31%
Russell 2000 471.12 -10.51%
MSCI Emerging Markets 20.22 -16.73%

Following the bursting of bubbles, it is normal to evaluate the causes of peaks and assign blame. Given various mainstream topics, it is clear headlines contain political and regulatory flavor. Simply, plenty of noise out there with rear-view examinations of an already peaked market. Similarly, it is becoming hard to avoid the frantic discussions of "Gloom & Doom" scenarios. Recently, emotional market responses seem to be the norm; this clarifies new extremes in volatility and sentiment readings. Last summer/fall set the tone for a major cycle shift. The origins of a visible credit crisis and peak in emerging markets served as early clues. The results of that "shift" are taking ugly turns with less predictable behaviors. Overall, there is a growing acknowledgement that this unraveling process was inevitable. Perhaps, this is an early step towards the confidence restoration process.

Market peaks come as more of a "shock"than a smooth trend. Many are forced to adjust to new emerging realities. For example, Crude is below $80, S&P is at a 5 1/2 year low, economic deceleration continues and the dollar has emerged . At the same time, contraction in Financial Services is an ongoing theme.

Assets managed by hedge funds may shrink to $1.3 trillion within six months from about $1.7 trillion as investors withdraw their money amid declining returns, according to Credit Suisse Tremont Index LLC. "Institutional investors are monitoring their portfolios very closely, and we expect to see continued redemptions," Oliver Schupp, president of NY-based Credit Suisse Index Co., said, "there will be a high degree of closures with many small funds pushed out." Investors withdrew a record $43 billion from hedge funds last month, stated TrimTabs Investment Research.

Money Management/ Trading:

Those relying on correlation and mean-reversion are struggling to dissect the current environment. It is understandable, that bottoms and tops are hard to time and indentify. Nonetheless, the market continues to tempt optimist and eager investors. In addition, pundits and veteran participants have pointed out that bargains are available. Interestingly, picking stock specific ideas has a shorter-term emphasis. Again, disruption in natural market flow can increase overall risk exposure.

"The removal of liquidity and deleveraging that's taken place around the world has caused tremendous dislocation in the price of those cash assets relative to the value of the underlying derivative hedges." (MarketWatch Oct. 24, 2008)

Macro Levels:

Crude [$64.15]: Holding above intra-day lows of $62. Nonetheless, an established downtrend as the commodity failed to rally. Following an usual rally on September 22, Crude has fallen by nearly 50%. Basically, it remains in a correction phase between $60-80.

Gold [712.50]: Down 27%+ since July 15th. Interestingly, Gold has not witnessed price appreciation in an environment of risk-aversion. Approaching 700 level, last visited a year ago (fall 2007) and served as a breakout level.

US 10 Year Yield [3.68%]: Normalizing around 3.60% in the last 2 months. Major support near 3.50%. In the short-term, signs of stability after mid-September 2008 lows.

US Dollar –DXY [86.44] : After forming a base between March and July, the currency index has broken out. Now, overbought and poised for minor corrections.

S&P 500 [876.77] : Staying above October 10 lows of 839.80. A short-term trading range forming between $750-900.

The positions and strategies discussed on MarketTakers are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the futurinvestment performance of any securities or strategies discussed.

Market View - October 20,2008

Weekly Results:

S&P 500 940.55 +4.60% 
NASDAQ 1,711.29 +3.75% 
Russell 2000 526.43 +.76% 
MSCI Emerging Markets 24.28 -1.53%

Markets attempt to restore natural trading flow after several weeks of disruptions and intervention. In the current readjustment period, investors struggle to look ahead given a lack of stability. Recently, the emotionally driven reactions have required near-term risk management due to high volatility. Of course, with pending elections and regulation reform, a new trend is yet to be defined. In this upcoming week, earnings can provide further company specific clarity. Also, economic data presents further examination on the condition of this cycle slowdown. As for the opportunists, stocks appear cheap and seasonally the fourth quarter offers a glimpse of hope. Nonetheless, more conviction and confidence is needed in the overall Financial system.

With the S&P 500 down 35% year–to–date, most valuations suggest a buy point especially given new October lows. "Almost $50 billion of that outflow came in the first 10 days of October"  (TrimTabs). This extreme outflow away from stocks continues to be a significant trend. Similarly, money managers are reshuffling portfolio's following a weak third quarter. Therefore, the mechanical part of the market can signal unusual behaviors. Similarly, risk-aversion is a dominant theme this year, as investors rotated to money markets. So far this year,  money markets have expanded by 16.5% or $405 billion (according to Invesco). On a similar note, EEM (Emerging Market Fund) is down nearly 60% in the past year. Again, lack of willingness to take risk is a reflection of investor panic. Following policymakers moves, investors will reassess their risk tolerance. In addition, Federal Reserve capital should slowly take effect. Meanwhile, credit crisis are not fully complete, but more patience is required.

Money Management:

Value seekers view pending declines as a buying opportunity. For example, the BKX (Bank Index) held above its annual lows of 46.52 set on July 15, 2008. Perhaps, this can indicate some bottoming process ahead. Technology and Healthcare offer few ideas given high odds of a mean-reversion rally.  For the most part, managing entry points on a near-term basis is vital for months ahead. A few long ideas below.

Stock Specific Ideas:

Healthcare: ABT (Abbott Labs), GENZ (Genzyme),BLUD (Immucor) and TECH (Techne)

Technology: ATML (Atmel), FORM (Formfactor), ORCL (Oracle) and ATVI (Activision Blizzard).

Staples: WMT (WalMart) and HSY (Hershey Co)

KEY MACRO LEVELS:

Crude [$71.81]:Developing a new range between $68-80. After a 50% decline since summer highs, the commodity is nearing oversold levels. Interestingly, the long-term trend is positive above $60.

Gold [784.50]: Attempting to shake off declines since March 2008. Near-term declines visible with Gold trading below its 50 day moving average of $833.55

US 10 Year Yield [3.92%] : Trading closer to the higher end of 2008 range between 3.40-4%. Next resistance level is at annual highs of 4.27%.

US Dollar DXY [82.41]: Early signs of a recovery from multi-year declines. Since March 1985 the currency index has declined significantly. The current uptrend is driven by a 17% rise from all time lows reached in March 2008.

S&P 500 [940.55]: Potentially forming a range between $900-1000. From August 11 to October 10 the S&P 500 dropped 31%, and these sharp declines take time to unwind.