Comments on: Brief Index Overview

By: Corey Rosenbloom

Corey Rosenbloom — Sat, 08 Sep 2007 20:25:24 +0000

The Jobs Report threw the market into a tailspin, violating recently established support zones. That happens from time to time. Fundamentals sometimes overrule the technicals – there’s no sure-fire answer.

I should start a countdown timer to the Fed’s announcement on the 18th. Could be fun to watch. Maybe the overall economy is weaker than expected? All eyes will especially be on that meeting now.

By: Glyn

Glyn — Sat, 08 Sep 2007 08:42:30 +0000

Hi Corey,
OK – so that was fun! Now what? I think you had support at ~13200 which was broken but will we see a big bounce based on expectation Fed will cut by 50bp? I keep looking at the DJI chart but……???

By: Corey Rosenbloom

Corey Rosenbloom — Fri, 07 Sep 2007 16:27:40 +0000

Indeed. Sector Rotation Theory – along with Business Cycle Theory and Market Theory – can be useful in anticipating what the Big Money traders are anticipating, but even then, there’s no sure-fire method to predict a recession. An official definition requires two consecutive quarters of negative GDP growth. By that time, the corresponding stock market will have fallen quite a bit before the average retail trader – or the news – will begin to posture accordingly with their market positions.

The Fed is tasked with ensuring high employment and keeping inflation in check (typically around 2% per year). They are NOT tasked with bailing out failing markets, especially if inflation is rising. Their job sometimes clashes with what the stock market desires. We may see a collision at their next meeting.

Interesting times, indeed!

By: Glyn

Glyn — Fri, 07 Sep 2007 16:02:06 +0000

I guess if it walks like a duck and quacks like a duck… Kudlow still can’t see a recession!? History shows that you don’t predict a recession you look back and notice you’re in one. Already cries being sent out for more rate cuts – what ever happened to fair market? You know, I spend time listening to CNBC Europe and Asia but its only in America that the markets appear to expect the Fed body to take heed of what it requires – all other markets just get on with their job and let their ‘Fed’ remain independent.

By: Corey Rosenbloom

Corey Rosenbloom — Fri, 07 Sep 2007 04:16:13 +0000

Thanks, Aaron.

A great principle is that “Markets alternate between expansion and contraction.” It looks like we’re going to a contraction period following the recent wild expansion period, and there’s not a lot that can dislocate the market like the Fed can, and all eyes will be on that crucial meeting… and price will act accordingly.

Should be fun.

By: Aaron

Aaron — Fri, 07 Sep 2007 04:11:43 +0000

Good technical analysis of the current markets. I agree with you, the technical picture is unlikely to change until September 18th, when stocks will likely make a large move in one way or another.