Sunday, February 05, 2006

Jobs Report Pushes Stocks Down

It’s a brand new week and the market needs to find some footing right now.  Some of the indexes we follow are getting close to their late January lows and some have gone below them.  The pattern of these indexes is distinct and represents the start of a down move that could develop fairly quickly.

The first clue the market gave was back on the January options expiration, January 20th when the Dow dropped some 200 points.  The futile, but inevitable, rally attempt was met with selling and now the stock market is heading back down, this time may be steeper than most expect.  

On Friday, the market continued the down trend that started on Thursday, and that was on no real news.  Friday did have some news, the jobs report, that was fairly good but “stock market” bad because it was perceived to keep the Fed in a position to raise rates.  This media confusion is not unexpected but it does need to be taken into perspective.  We don’t really care what the media says; we care what the market says.  

The market set a low target back in late January that target now will act as some support for the next few days but we think the pattern is such that it will not hold for long.  The market is in a very precarious position at the moment based on the momentum indicators and the basic technical position that exists.  We urge extreme caution and repeat our recent mantra … Be careful out there and we hope you’ve already sold into these rallies so far this year.  

This coming week is a fairly quiet one as far as news goes, with hardly any economic news to speak of and with most of the earnings reports out.  We think that if the selling continues on “no” news, that would not be a good sign for the bulls.  Monday’s can be strong but the market has seen the early month rally and now is faced with some trouble in the next couple of weeks.  Be careful out there… (one more time)

Dow Industrials:  10,793.62
RYVNX:  18.98
RYAIX:  22.15
TLT:  90.85
BEGBX:  13.12

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