US Markets Update and OutlookU.S. stocks turn to final week of 2008
Investors likely to ditch worst stocks after market's 40% drop year to date
MarketWatch: The final week of the 2008 is unlikely to be as tumultuous for stocks as the year has been to this point.
But some economic data points might provide insight on the depth of the recession, and some selling is expected in the most battered stocks by investors seeking a break on their tax liabilities. "Next week, people will be finishing their tax strategies," said Hugh Johnson, chairman of Johnson Illington Advisors. "There will also be some rearranging of portfolios to prepare for the next year." As year-end nears, investors typically sell underperforming assets to offset tax liabilities.
This trend was partly at work over the past week, which saw the Dow Jones Industrial Average lose 0.7%, the S&P 500 index drop 1.6% and the Nasdaq Composite fall 2.2%.
And most investors probably won't have any trouble locating losing assets in their portfolios. Since the beginning of 2008, the Dow industrials have lost 35.8%; the S&P 500, encumbered by financials, is down 40.6%; and the Nasdaq Composite has fallen 42.3%.
In post-holiday trade Friday, the market managed to post gains in spite of grim results from the retail sector. Crude prices gained 6.7% to $37.71 a barrel, lifting the energy sector, after a four-session drop and a 33% drop thus far in December. The Dow industrials rose 47 points to finish Friday at 8,515, with shares of General Motors Corp. pacing the gainers. The Federal Reserve approved the request by GM's finance arm, GMAC, to become a bank holding company, clearing the way for it to receive aid from the government. Online retailer Amazon.com provided some cheer after saying its 2008 holiday season had been its best ever, in spite of grim results across most of the retail sector.
Economic woes
National retail estimates were more grim. Total retail sales dropped 5.5% to 8% for November and December, according to MasterCard's SpendingPulse. A 40% drop in the price of gasoline compared to December 2007 accounts for almost half of the decline. Excluding gasoline, total sales were down 2% to 4% this holiday season versus the same period in 2007.
"Everybody is going to watch the economic numbers looking for any signs that the consensus forecast is going to be right," said Johnson. "So far the consensus is that the economy will start to recover in the second half of 2009."
Meanwhile, more economic woes will likely be on display next week, with the release of the S&P/Case-Shiller Home Price Index, a manufacturing survey for the Chicago region, and a reading of consumer confidence, all due Tuesday. Wednesday will bring weekly jobless-claims data, an update on mortgage applications and crude-oil inventories. Markets will be closed, and no economic data will be released Thursday, New Year's Day. On Friday, a survey of the national manufacturing sector is likely to be closely watched. "Manufacturing has been plunging and we expect the ISM index to fall to 34 in December, pushing it below its 1982 recession low," economists at BNP Paribas said in a note.
According to Johnson, investors will try to read the tea leaves not only in forward-looking economic indicators but also in the economic policies of the incoming administration, as well as from the behavior of markets, including the battered credit markets.
KLSE CI Technical Update and Outlook
BT: The KLCI's brief technical rebound hit its intra-week high of 888.03 on Monday, moving into the confines of this column's envisaged support zone (879 to 913 levels).
Subsequent technical pullbacks sent the index to its intra-week low of 862.29 on Wednesday, staging a re-test of this column's envisaged support zone (839 to 873 levels).
Chartwise, the composite index continued to stay below the support of its immediate downside support for the sixth consecutive week. It continued to stay below its intermediate-term downtrend yesterday.
The index's daily trend continued to stay below its intermediate-term downtrend. It continued to stay below its intermediate-term downside support .
The KLCI's daily and weekly fast MACDs (moving average convergence divergence) continued to stay above the support of their respective slow MACDs at the market close yesterday. Its monthly fast MACD continued to stay below its slow MACD.
The composite index's 14-day RSI stayed at 49.29 per cent level yesterday. Its 14-week and 14-month RSI stayed at 29.36 and 29.10 per cent levels respectively.
The KLCI staged a failed attempt in trying to take out the resistance of its 50-day moving averages. A decisive break of the 50-day moving averages is likely to signal a major trend reversal. Until then, it will continue to consolidate within range-bound trading activities.
As it turned out, the traditional year-end window-dressing rally seemed to have run out of steam. With that, the KLCI will continue to consolidate within range-bound activities.
Next week, the KLCI's envisaged resistance zone hovers at the 870 to 904 levels while its immediate downside support is at the 830 to 864 levels.
* Worse one day death toll in Gaza in 6o years. Israel "air-tack" Hamas-ruled Gaza killing atleast 205 people, destroying 40 security compounds and wounding 700 Palestinians.
* South Korea sees unprecedented economic crisis looming!
* Bloomberg: Japan's recession deepens as industrial production falls most in 55 years.
* Thailand (SEA's second largest economy) plans to spend USD8.6b (or 3% of GDP) in stimulus package to boost growth. Malaysia? What slow down? We are still doing well and confident in achieving growth next year!!!!
No comments:
Post a Comment