Friday, October 22, 2004

early Halloween

The market took a hit today as the Dow fell 108 to 9758, the Nasdaq tanked 38 to 1915, and the S&P 500 lost 11 to 1096. The Dow is at the lower end of a declining channel line and RSI is down to 30.7. It could be ready to bounce like it did the previous three times. The $SPX and $COMPQ don't look as oversold. The RSI for the Nasdaq is flat neutral at 50.0.



Here's Band's take, excerpted from his hotline.


Halloween comes early to Wall Street! Stock prices declined again this week, with the headliner Dow Jones Industrial Average closing today at a new low for 2004. Record oil prices are clearly spooking investors.

But is the picture really so haunting? We don’t think so. For one thing, the NASDAQ actually gained a couple of points on the week. Relative strength by the tech-heavy NASDAQ has occurred at several important bottoms in the past two years. We also believe the election uncertainty is starting to lift, which should help the market. We continue to look for a final low very soon, to be followed by good November-December rally.

Thursday, October 21, 2004

Catch The Low

from Richard Band's Journal

CATCH THE LOW
October 20, 2004, 10:28 am EDT

The stock market is forming a good, tradable bottom in here. Within the next couple of days -- probably well before the election results are known -- Wall Street should make its peace with the political forces at work and move on to the traditional post-election relief rally.

What makes me so sure there’s a rally coming? I’ve kept an eagle eye on one of the market’s most reliable contrary indicators -- the behavior of the traders in the options pits. Whatever investors may say to pollsters or the media, the options data tell us what folks are doing with their money.

Truth is, the options players have been buying an exceptional number of puts (downside bets) lately, compared with calls. In fact, we’re seeing essentially the same degree of pessimism that prevailed at the lows in March, May and August this year -- even though the major market indexes are hovering comfortably above those lows.

I foresee a rally of 5%-7%, maybe a little more, on the S&P 500 by year-end or early 2005.