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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
January 12, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata Financial
Last week, our favorite groundhog, Punxsutawney Phil, made an early
appearance in a new gig, forecasting the direction of the stock market. He
came out to greet the hopeful bulls when our last resistance level of SPY92
was pierced to the upside, hoping to avoid seeing his shadow which would
portend six more weeks of a wintry market. I was looking for a quick sprint
to SPY100+ and by Wednesday pre-market, our new lower support level of SPY92
was holding, in spite of continued negative fundamental news (car sales off
30-53%, the Madoff mess …). Unfortunately, some unexpected news then hit us
like a 1988 Mike Tyson rage -- (1) ADP reported that their never-correct
unemployment forecast for December was a whopping 693,000 job loss (2) Intel
(INTC) decided to reduce earnings expectations (again) and (3) fraud at
Satyam Computer (SAY), the Indian IT outsourcing company. This turned out to
be too much for Phil (who went back into his tree, uncommitted) and for our
resistance level of SPY92 to handle and so we sold off the rest of the week.
On the breach, stops were tightened to limit downside damage, but Wal-Mart’s
(WMT) surprise earnings miss and subsequent gap down Thursday hurt relative
performance. Technically, we are still in a bullish pattern of higher highs
and higher lows, but attention must now focus on SPY86 as downside support.
Assuming it holds, we will wait for the breakout above the now higher-high of
SPY94 before exhaling. Until then, tight stops are, again, the rule, as we
don't want to participate in the downside purge if SPY86 is breached to the
downside.
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