Reply #1: Market WrapUp

[ozymandius]

Large Financial Institutions' Technical Analysis
BY MARTIN GOLDBERG, CMT

The rhetoric today pertains to sub-prime, alt-A and other potentially bad mortgage debt. Fundamentally these topics provide the foundation for a large wall of legitimate worry. What were the main drivers of the current bull market in US stocks? To be sure, the development of emergency markets’ economies played an important roll for industrial companies in the US. But as we look at the US market, what industries have stood out as the real stars during the time of the last bull run? If it was technology in the late 1990’s, the stars of this US bull market have been financials, US consumer products and services related companies. However, now the US consumer seems to be spent. If this is not apparent, you may reference recent disappointing results from the likes of Wal-Mart, J.C. Penney, Costco, Brunswick, and Sears to name a few. Also reference results from the homebuilders which were just horrible.

If you think that Fed action is going to cause anything beyond a relatively short knee-jerk rally, think again. As you will see tonight the charts of financial companies are saying that something pretty ugly is developing in the US economy. As of this day, Fed easing of short term rates are pretty much discounted in the action of the stock market and this news cannot get any better. It is therefore timely to examine the technical charts of financial companies now – when the news cannot get any better.

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Today’s Market

Today’s market contributed to the recent market rally on diminishing volume as all indices were up, although there was little conviction behind the rally. The action tomorrow will be more important than today with the government putting out economic data. An important aspect of the market and economy is the behavior of the US consumer. The conventional wisdom over the last few years has been that the “high end” consumer is immune from the difficulties in the real estate and mortgage markets since the high end is doing so well. This reasoning has been used by many on Wall Street to sell high end retail stocks to the public.

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