Daily Investment Interpretations
November 4, 2008
Wonder of wonders! the markets registered a major advance today, ahead of
the Presidential and Congressional election results. The NASDAQ snagged an
additional 53.79 points (3.12%), closing at 1,780.12, the Dow pegged
305.45 points (3.28%) to reach 9,625.28, and the S&P rallied 39.45
points (4.08%) to reach 1,005.75. Oil jumped $6.62 to hit $70.07 a barrel
on hopes for a stronger economy, while gold added $30.50 an ounce to close
at $757.50. The VIX fell to 47.73.
Michael Ashbaugh released his Tuesday technical analysis of the stock markets: Ashbaugh's market recovery checklist. He's unable to give a clear signal, but if the market averages exceed certain upside resistance levels, then the given averages have a good chance of trending higher, whereas, if they penetrate certain base levels, they stand a good chance of moving lower. He suggests that this rally offers trading opportunities, bur unfortunately, they've already advanced so far that it probably isn't wise to try to trade at these elevated levels. This analysis, coupled with all the other technical analyses I've read, is consistent with the notion that technical analysis has the same predictive value as fortune cookies and tea leaves. This should come as no surprise. A widely available technique for accurately predicting what's coming next in the stock market is an oxymoron. Once the accurate prediction technique becomes well-known, everyone will try to use it and it will no longer work.
The reason for today's market boost seems to be that Wall Street credit markets are loosening up (though not our Main Street markets).