Tuesday, January 24, 2006

An Up Day

The stock market recorded an up day Tuesday rallying the Dow only about 25 points but pushing the NASDAQ COMP up over 16.  So, how does this fit into the grand scheme?  Well, the COMP drop last Friday was about 55 points and now we’ve seen a nice corrective rally of about 17 points so far.  The overnight futures are higher this evening but those cannot be trusted for real trading in the morning.  Fibonacci would allow about 20 points of correction at the first level of resistance and then about 27 at the second level.  The best we can say is that the market should be hitting resistance in the next ten points, or so, on the COMP.  The Dow has barely registered on this bounce.

One of our readers (thanks CM) sent in a nice article on the technical side of the market over the past several weeks.  It reads like a page out of the Wednesday Update (WU) with its talk of support and resistance, as well as failures.  We know that the market reacts to the failure of achieving the previous high.  This is exactly what happened last week when the Dow first broke down through 11K, after a magnificent three days above that level.  Then it tried to rally but couldn’t get back to that 11K level, setting it up for the fall on Friday.  The article, Where’s the Bounce? By Tomi Kilgore, was on marketwatch.com for those of you interested in trying to find it.  I’m not the only one paying attention to these types of things.

The big news today was the Pixar purchase by Disney.  I don’t see this having any big influence on the market but thought I would mention it.  The news we are waiting for is over the next couple of days.  Wednesday brings the December existing homes sales with a forecast of -1.0%.  Then on Thursday we get to see the durable goods orders, expected to show a 1.5% increase.  And, then on Friday comes the December new home sales with a consensus of -1.4% after last month’s -11.3%.  We are interested to hear what the real numbers are going to be.  

Be careful.

Dow Industrials:  10,712.22   +23.45
RYVNX:  18.48
RYAIX:  21.84
TLT:  91.90
BEGBX:  13.48

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