Sunday, January 3, 2010
ACCESSIBLE TERRAIN
Possible Set-Ups/Possible Let-ups
The market was very quiet Friday until the last hour of trade as it began sliding and closed at its lows. Not sure whether or not we should read anything into the slide as there was little volume and little conviction anywhere one way or the other. The pullback, however, is exactly what we were wanting for any chance at new MISSILE LAUNCH plays. The S&P futures closed right above the recent breakout levels and if we can hold here (along with the 21 SMA) then several of our plays will be considered for launch. If not, then we may be heading back down to the 50 SMA (the bottom of the recent range) and will look to enter our BUNKER BUILDING PLAYS. I just hope we do not get into that sideways shuffle for another long period of time. Go down, go up, just don’t go sideways for very long is all I ask.
The January Effect
Just like the ritual of New Year’s Resolutions, the stock market has a tendency to have a resolution of its own known as the January barometer or January effect. But just like our own resolutions, which can be planned but the follow through can be short lived if at all, the January effect can also suffer from little or no follow through. The January effect was first introduced in 1972 by the well respected market analyst Yal Hirsch who outlined the simple theory: as January goes so goes the year. If January ends positive then so will the year; if January ends negative then so will the year. An even more dramatic assertion is as the first five trading days of January goes, so goes the year. But it does have some merit as the stock market has generally performed better during years following a bullish start than during the years with a bearish start. Hard for me to base my annual market view on one month, nonetheless 5 days! I have no idea where we will be in December 2010. Heck, I do not even know where we will be in February! I just trade the current charts and will do just fine whatever the year-end brings. I have included a SPY (S&P ETF) chart from the MONTHLY STOCK MOVER weapon to give you an idea of the market’s performance for the month of January for the last 10 years. It is not a prediction but at least you will have the numbers. One thing you will notice: last year was not a good January for the market yet by December 31 we were fairly close to the highs of the year.
TODAY’S TRADING SUMMARY
BATTLES WON (PROFIT TARGETS HIT): SMH
BATTLES LOST (LOSS TARGETS HIT): NSC, AMP
ONE NEW ENTRY TODAY.
