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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
December 01,
2008
From Elliot Goldberg,
Registered Investment Advisor, Goldata Financial
Last week began by watching this week’s
version of "Sunday Night Bailout" instead of Sunday Night Football.
Late Sunday night, our government made, yet, another investment in Citigroup
(C) to shore up confidence that the banking system was not going down the
tubes, dismissing any notion that they would let any of the large banks fail.
This continued a massive rally, begun last Friday, the likes of which have
not been seen since 1933. Yet even this historic rally could only cut
November's losses to 9+%. I am no closer to having any faith in fundamental
earnings estimates as non-Fed guaranteed lending is still basically
non-existent, although banks like Morgan Stanley (MS) and Goldman Sachs (GS)
were able to borrow money with government guarantees. As a result, we must
rely on the technicals of the market for our clues of future market movement.
As stated last week, I was hoping for the formation of a bullish technical
"reverse head and shoulders" formation on the charts and Mr. Market
could not have been more accommodating. Friday's close was significantly
above the previous "left shoulder" allowing for the next market
pullback to draw in the "right shoulder" on a subsequent rally and
complete this bullish technical pattern. The market's fundamental news
continues to be dreary, but remember that the market is always looking
forward, trying to anticipate where fundamentals will be 6 to 9 months from
today and must be dismissed. Game plan: Time is on our side as each day
brings an acceleration of the 200-day moving average down towards current
prices. The bulls must get the nod here as it is hard to believe there
is worse fundamental news to come and the charts have the potential to signal
the "all-clear". I'll be watching for the completion of the
technical pattern described above, hoping for a trade below SPY80 to get more
aggressive although any trade below SPY88 with a subsequent rally will qualify.
A trade below SPY74 would negate this thesis and make for an unhappy New
Year.
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