WizzWatch Market Newsletter 12.15.08 – 12.19.08

To end this week the Dow Jones Industrial Average closed on the downside while the Nasdaq and the Standard & Poors 500 ended the week on the upside. Energy traded shares were the top performers as financials were the worst. Oil had its biggest gain in 9 years, the Gold Index ended the week on the upside as the U.S. Dollar fell against the basket of major currency pairs.

Many investors are thinking that we are out of the house but we are still in a bear market. We are 20 percent above the lows that were made last month on the Dow, and we may see a decline before moving higher. The Dow has been whipsawing back and forth for the past few weeks between the highs slightly above 9700 to the lows around the 7500 area. A break above the 9700 area will be the first step for the Dow to breakout to the upside, but a break of the lows will take the Dow even lower. There is still a lot of uncertainty in the market after weeks of bad economic data from tumbling job numbers, to consumer credit. The only thing to do at this point is to be patient and wait for the market to turn around.

The Nasdaq is above its 5 week moving average but below its 10, 50 and 200 week moving averages. The Nasdaq Composite Index ended the week trading at 1,540.72 up 34.41 points on 10.4 billion volume.

Over at the S&P 500 the index is poised to move higher after hitting the low of 741.02 a few weeks ago. The Index has been moving to the upside as the moving average convergence divergence is starting to cross. The index ended the week with a doji candlestick. Doji’s represent in decision in the price of a stock, so there is a possibility that the index may open on the upside or on the downside when the market opens up on Monday. The index ended the week trading at 879.73 up +3.66 or 0.42 percent.

At the Dow unlike the Nasdaq and S&P 500 ended the week down for the second consecutive week. The Dow ended the week on heavier than average downside volume. The index closed at 8,629.68 down 5,74 or 0.07 percent. The Dow is currently above its 5, and 10 day moving average but below its 50 and 200 week moving averages. The index has been whipsawing back and forth between 9700 and 7500 for the past 9 weeks. In order for the index to move into positive territory there would have to be a breakout above upside.

The Gold Index has been on a move to the upside with resistance at 834.50 and downside support is at 681.01 per troy ounce. Gold ended the week trading at 820.50 up 68.30 points or 9.80 percent.

On the Oil front the Oil Index edged higher after 23 weeks of downside pressure due to oil production cuts by OPEC oil ministers and well as non OPEC members. The purpose of the production cuts is to stabilize the price of oil. Most OPEC members think that a fair price for oil would be about $75 per barrel but many analysts feel that the price of oil will head lower. As for now it seems that oil may move higher in the near term but I predict that we may see oil at $20 - $22 per barrel in the next few weeks, the price that it was at when Bush became president in the year 2000. The oil index ended the trading session with its biggest weekly move in 9 year at $49.12 per barrel up $8.13 or 20.36 percent.

*** Please have a look at the charts below ***
By: Marlin Rolle