Where is the Dow & others heading in 2005?

[roguetrader]

Well, it seems we got the bounce up I mentioned in the posts over the weekend. I don't see this going any higher than the 10350 - 360 range and then falling back again to around the 10250 level. This would then complete the 5 stages of the Elliot wave downwards. (posted here and on Trading the SPX).

IMHO the test of the 10250 level will be crucial to maintaining or breaking the longer term upward trend. We shall wait and see on this.

Agreed Jill, very weak bounce at the moment, internals failed to go positive so far, and indeed as I write this are threatening to head lower again.

 

[roguetrader]

Very slow grind higher at the moment, and not very encouraging for bulls.
NYSE internals are neutral now while Nasdaq internals remain firmly in negative teritory. Total volume is relatively light.

 

[kriesau]

Oil now just 5 cents off $61.

 

[JillyB]

Well we've made 10,250. Let's see if this will hold. I think a bounce off it and then a retest.

My predicition for today is still holding - so far.........

 

[roguetrader]

Well we've made 10,250. Let's see if this will hold. I think a bounce off it and then a retest.

My predicition for today is still holding - so far.........

Yup following the script nicely, still not attracting any real buying interest, may have to go lower yet.

 

[LION63]

Now that oil is slightly north of the $60 level what next?

Many believe that the price has been forced up by speculators and that once they unwind their speculative long positions it will fall back below the $50 level. There is also a feeling that supply exceeds demand and soon this will be reflected in the markets. This is the reason that the major stock markets have risen or at least held steady whilst oil has been on the rise along with the fact that oil has less of an economic impact than it did back in the 1970s.

The problem is much more structural than first meets the eye and most arrows point in the direction of oil rising to $75 and maybe even as high as $100. At those levels the pinch will be felt all over the globe and it will bring financial devastation and depression with it. We all know that oil is a dwindling commodity and there is no way to replace the oil that is being consumed add to that the fact that a large part of the oil that is pumped is the heavy type that costs a fortune to refine in the first place. Forget extra production as the refining capacity does not exist which is why most of the major oil producers are net importers of petrol and gas. Geopolitical events have not been factored into the markets and heaven help us if hostilities between China and Japan were to flare up or if “The Coalition of the willing” decide that Iran must be dealt with sooner rather than later. Israel took delivery of 500 missiles/bombs that are designated “bunker busters” and as one hack put it, they are not to control rioters in Palestine or to suppress Hamas, could it be that they will do the dirty work for the Coalition?

The first sector to feel the ill wind will be transportation whose major cost tends to be oil/gas, are they going to be able to absorb the extra costs or will they have to pass the burden on to their customers? Most of the major airlines are already in Chapter 11, on the verge of it or just struggling to stay in the air; this will be the final straw that breaks the camels back. Shipping and buses will also haemorrhage along with gas and electricity suppliers, at least the utilities will be cushioned by the fact that they can easily pass the extra costs on the customer provided they can get past the regulators.

Now you might say that since you do not own a car it is not your problem how high the price goes but this is a simple illustration of how it will still affect you – You sit down for breakfast and you sip that fresh glass of orange or grapefruit juice that you just bought from the supermarket. The farmer somewhere out in Africa or Central America plucked the fruit and drove to the town to sell them, they were then loaded on to a plane and flown to the processing plant and crushed by machinery to produce the juice which was then packed/bottled and delivered to the supermarkets. As you can see, there is no escaping the effect of higher oil prices.

The average Joe is already up to his eyeballs in debt and that additional property he bought has not appreciated as quickly or by as much as he had expected so selling or refinancing are not options. He is hoping that time will help remove the financial millstone from his neck but in the meantime he has to reduce spending because of higher interest costs and now along comes higher energy costs (not to mention that if he is a UK resident he also has to pay higher National Insurance Contributions). The knock on effect is that discretionary spending will decline quite sharply in the second half of the year.



Corporate profits are already showing signs that the high growth levels of the last 2 years cannot and will not be maintained, in some cases they are already falling. The central banks will come to our aid with cuts in interest rates but they will be too small to cushion the impact of high oil prices. Some might believe that shares currently offer good value (that is a side issue and a debate that could rage for a long time), what is unquestionable is that once profits fall, valuations will have to fall to reflect this and we all know that lower valuations mean lower equity markets.

That is not to say that money will not be made but it means that the long only traders will have to be more discriminating in their selection of trades and stay closer to the markets. Companies, sectors and stock markets that are adversely impacted by oil should be avoided where possible unless one is trading them on the short side. Money will be made and lost in large quantities and many companies and individuals will go under by the time this runs its course.

Happy hunting.

 

[ark47]

Dr.Math

Hi, all
I like technical analysis, specialy forecasting for short term

 

[Minder]

Now that oil is slightly north of the $60 level what next?

.......Corporate profits are already showing signs that the high growth levels of the last 2 years cannot and will not be maintained, in some cases they are already falling. The central banks will come to our aid with cuts in interest rates but they will be too small to cushion the impact of high oil prices. Some might believe that shares currently offer good value (that is a side issue and a debate that could rage for a long time), what is unquestionable is that once profits fall, valuations will have to fall to reflect this and we all know that lower valuations mean lower equity markets.

That is not to say that money will not be made but it means that the long only traders will have to be more discriminating in their selection of trades and stay closer to the markets. Companies, sectors and stock markets that are adversely impacted by oil should be avoided where possible unless one is trading them on the short side. Money will be made and lost in large quantities and many companies and individuals will go under by the time this runs its course.

Happy hunting.

http://www.occ.treas.gov/ftp/deriv/dq105.pdf

Q1 2005. The OCC’s quarterly report on bank derivatives activities and trading revenues is based on call report information provided by U.S. insured commercial banks. The notional amount of derivatives in insured commercial bank portfolios increased by $3.2 trillion in the first quarter, to $91.1 trillion.

July 1st is the start of Q2 reporting.

 

[Racer]

Oh look at that futures flying in the middle of the US night...

 

[Racer]

SEC probes how IBM posted poor results

 

[Racer]

INTC weak demand for dual core cpus

 

[Pat494]

Just a small bounce yesterday ( you probably blinked and missed it )
Hows about a bigger bounce today ?? :idea:

 

[JillyB]

Dow Pre open is near yesterdays highs - currently at 10326. A nice bounce off 10250 if you ask me.

So far this level of support at 10250 appears to be holding, but I don't think we've seen the last of it being tested - just yet.

 

[karmit]

sorry for out of context query - but all the gurus seem to be concentrated on this thread ;-)
planning to buy a book for tech analysis - found this one on the "resources" of this website -
"Fibonacci and Gann Applications in Financial Markets: How to Apply Ratios Correctly in Successful Analysis
George MacLean"

pointers/ comments / recommendations would help.

cheers,
karmit

 

[roguetrader]

Dow Pre open is near yesterdays highs - currently at 10326. A nice bounce off 10250 if you ask me.

So far this level of support at 10250 appears to be holding, but I don't think we've seen the last of it being tested - just yet.

Agreed, the bounce yestaerday was somewhat unconvincing, and as such I would not be surprised to see another assault on that level soon, Upside should be limited to 380-390. But we'll se what today brings.

 

[roguetrader]

Strong start here internals very bullish.

 

[rrtech]

Agreed, the bounce yestaerday was somewhat unconvincing, and as such I would not be surprised to see another assault on that level soon, Upside should be limited to 380-390. But we'll se what today brings.

Where do you get 10380-10390 from.

 

[JillyB]

Im looking at between 10360 and 10370, taken from an area of consolidation on Friday. This also relates back to resistance/support level at the beginning of May.

Interesting my R2 on the daily pivot is 10,374.

 

[rrtech]

What does everyone have as their key resistance level for today?
I have 10370 as resistance level 2 on the daily pivot system. (level 1 is 10330 and the daily pivot is 10292)

 

[JillyB]

Mine is similar - but I trade with CMC, so my figures relate to their prices.

Daily pivot is 10,292
R1 is 10,331
R2 is 10,374
S1 is 10,252

I can't see S2 on the screen, hope this helps.