MARKET COMMENTARY (1-28-08)

I can't say that we're going to go up in a straight line, as there will be consolidations, but at the moment, we are likely to head higher over the next few days. Looking at a 15-day chart, we are in the 865-880 trading range on the SPX. Did you notice how symmetrical the chart is becoming? It means that we could be consolidating here before another breakout. It's apparent that strong-handed longs will be holding their positions for a longer short-term period.

I signal some caution because we've been up for 4 days straight, and the chance of a down day is extremely high, but that shouldn't bother you unless the majority of yesterday's gains are wiped out. Before that happens, though, it's important to identify a down day as a normal correction (pullback on low volume) or an all out meltdown (accelerated sell-off on high volume). A nice correction is the opportunity to add onto existing positions.

Make note that the 20, 30, and 50-day moving averages will provide support/resistance (on the 40-day chart). Use these MA's as guides for today's trading, because they will dictate the pullbacks and bounces.


We also have durable good orders (8:30AM EST), jobless claims (8:30AM EST) and new home sales (10:00AM EST) coming out today. The consensus for the durable goods is -2% with a range of -6% to +1.2%. The previous reading was -1%. The consensus for jobless claims is 575,000 with a range of 540,000 to 650,000, although I believe the whisper number is getting bigger every week. The previous reading was 589,000. Finally, the consensus for new home sales for Dec is 400,000 with a range of 350,000 to 410,000. The previous reading was 407,000.

Don't forget that we have the GDP report coming out tomorrow. The expectation is -5.4% Q/Q change! The previous reading was -0.5%. The range is -7% to -3%. Terrible.

Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!