Stocks,Heading,Down,Despite,Ob finance, share, loan Stocks Heading Down Despite Obama Optimism


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Let's take a look at the stock markets from a technical perspective. The DOW has closed lower in five straight sessions, but continues to hold well above its multi-year low, as is the case with the other major indices. The Russell 2000 broke below its 20-day moving average (MA) of 483.46 on weakening Relative Strength, as near-term signals are bearish. The index is also below its 50-day MA of 474. Look for support at 458. In all, the near-term technical signals for the major indices are moderately bearish, with weak relative strength. There are indications that markets could see more downside testing in the near term. We are seeing a slight downward movement in stocks. About 10% of all U.S. stocks are above the 200-day MA, down from 12.59% a week earlier, but up from 6.52% a month ago. Watch to see if the downward move continues.Technically, the new-high/new-low (NHNL) ratio, a measure of the number of stocks touching a new 52-week high versus the number of stocks that have declined to new 52-week lows, has been extremely bearish on both the NYSE and NASDAQ, but there was some optimism in the recent sessions, albeit it's been faint. The NHNL on the NYSE has shown some improvement with two recent bullish readings. The overall picture remains extremely bearish, with 72 of the last 87 sessions with a reading below 20% including 63 of the last 74 sessions, which were very bearish. There have only been five readings over 70% since May 22. The NHNL on the NASDAQ has also been weak, with only four bullish readings since October 11, 2007. In all, 78 of the last 87 sessions were below the bearish 20% level. The near-term trend is down and, unless we see a reversal in investor sentiment, we would question the sustainability of any rally that materializes. Now flipping over to option volatility ratios, the readings are showing some decline at this time, which could suggest a near-term top. The CBOE NASDAQ Volatility Index or VXN -- a barometer of near-term market volatility based on NASDAQ 100 index option prices -- is generally viewed as a contrarian indicator. The five-day VXN has been on a decline in recent weeks. Continued lower readings could point to a near-term top on the NASDAQ. In the broader market, the five-day CBOE S&P 500 CBOE Volatility Index (VIX) has also been trending lower, indicating a potential near-term top on the S&P 500.So, despite the upcoming transition of power at the White House with President-elect Barack Obama taking control on January 20, there are signs that stocks could be heading lower in the near term based on some technical readings. And, unless we see strengthening in these technical indicators, any chance of a sustainable rally will be questionable. Obama may not care about the technical picture, but he will need to convince or show investors that he can deliver on his promises to turn America around and, if this does pan out, we are sure that the technical picture will improve, as it does essentially reflect the opinion of the masses. Profit Confidential---http://www.profitconfidential.com/LOMBARDI PUBLISHING CORPORATIONNews, Analysis, and Information Services Since 1986.One Million Customers in 141 Countries.Lombardi Publishing CorporationFinancial Publications Division350 Fifth Avenue, Suite 3304New York, NY 10118-3304---Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever, without written permission from the copyright holder.

Stocks,Heading,Down,Despite,Ob

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