How To Anticipate A Market Decline
Stock indexes are lower on a surprisingly weak consumer
confidence report following a three-day countertrend rally. To get inside the
head of a Wall Street veteran and see how he anticipates market direction, make
sure to read this morning’s Views
From The Trading Desk by Kevin Haggerty titled Anticipate, Don’t
Meditate. Kevin takes you through his thought process to size up likely
market scenarios and shows you how he anticipated this morning’s decline in the
Nasdaq.
Another way to have anticipated declines such as this
morning’s sharp move down in the indexes is to check TradingMarkets.com’s Market
Bias Indicators Page. When you get three or more indicators pointing in the
same direction, the odds of a market move in the indicated are greatly enhanced.
Today we have three indicators pointing down.
The Nasdaq is down 33.04 at 1879.38, the S&P 500 is
down 1166.53, and the Dow is down 123 at 10,258.
The Conference Board consumer confidence index dipped
unexpectedly to its lowest level in four months. Traders and market
observers watch consumer confidence because it is considered a leading
indicator of consumers’ spending habits. Consumer spending accounts for
about two-thirds of gross domestic product and has been considered one of
the few pillars of support in an economy slipping into recession. Recession
is generally defined as two quarters of zero or negative GDP growth.
Tomorrow the government will release the final revision of Q2 GDP figures
and many economists are forecasting a drop to zero growth from the previous
revision of .7% growth.
Doral Financial
(
DORL |
Quote |
Chart |
News |
PowerRating) one of the few stocks to
have met Mark
Boucher’s stringent intermediate-term buy characteristics is turning
around from yesterday’s steep decline and is up 3.43 at 34.01.
Astoria Financial
(
ASFC |
Quote |
Chart |
News |
PowerRating) is also recovering from
a quick slide into negative territory with a gain today of 2.50 to 58.25.
A slower recovery and expectations of persistent
economic weakness imply the Fed will continue a monetary policy of low rates
to stimulate the economy.
Demonstrating broad-based market weakness today, no
sector is up more than 1%. Internets
(
GIN |
Quote |
Chart |
News |
PowerRating), gold and silver
(
XAU |
Quote |
Chart |
News |
PowerRating)
and oil services
(
OSX |
Quote |
Chart |
News |
PowerRating) are down 1.5%Â to 2% each.