WizzWatch Market Newsletter 12.29.08 – 01.02.09

As we get closer to the end of one of the worst years in the history of the stock market we are continuing to see declines. For the week that passed we had very light volume on all three major indices. The Nasdaq Composite Index, the Dow Jones Industrial Average and the Standard and Poors 500 all ended the week trading lower. Stocks ended the week down as profit outlook gets weaker and home prices continue to decline. The U.S. Dollar continues to fall against a basket of major currency pairs as the price of gold and oil are in position to move higher. Commodity producers gained as oil moved slightly higher as energy and material stocks followed ending the week on the upside. Master Card Advisors reported that we have had the worst holiday retail sales in 4 decades as holiday sales declined between November 1st through December 24, 2008. Luxury goods are down 35 percent followed by electronics and appliances down 27 percent.

The Dow Jones Industrial Average opened the week at 8,573.37 but ended the week lower. The Dow has been on a decline for the past 16 months and is currently moving in a sideways consolidation. The Dow is currently down 36 percent for the year, the worst decline ever took place in 1931 as the markets tumbled 46 percent. The Index has been moving sideways between 8000 and 9700 for the past 11 weeks as many investors are wondering when will the market turn around. We are still in a bear market for now, but as soon as all the economic data starts to improve we will see the markets get back to normal. A correction can take anywhere from six to nine months before things start to get better but the only thing that we can do going forward is to be patient. The Dow Jones Industrial Average ended the week trading at 8,515.55 down 63.56 points or 0.74 percent on 2.03 billion trading volume.

At the Nasdaq Composite Index there was also a downturn this week after closing slightly on the upside the prior week. The Nasdaq is currently below its 5, 10, 50 and 200 week moving averages. The 5 week moving average is at 1,536.03 and the 10 week is currently at 1,550.17. In order for the index to move higher we will need to move above both the 5 and 10 week moving averages. This week was a very light volume as well for the Nasdaq due to the holidays as the index closed to end the week trading at 1,530.24 down 34.08 or 2.18 percent on light than average volume of 4.04 billion. The average weekly volume on the Nasdaq is 10.5 billion.

As for the S&P 500 we are continuing to see declines as the index continues to move in a sideways consolidation. The index has been moving between a low of 800 to a high of 950 for the past few weeks as we remain in a tough economic environment. The top gainer to end the week in the S&P 500 was Jones Apparel (JNY); the company stock soared after the company significantly reduced its credit line. The S&P 500 index ended the week trading at 872.80 down 15.08 points or 1.70 percent on light than average trading volume of 8.23 billion. The S&P is currently above its 5 week moving average but below the 10, 50 and 200.

The Gold Index has been on a tear lately as the US. Dollar falls against other currencies. Gold hit an all time high in March of this year and has been on a decline since then. As for now the index is poised to move higher and has been on a move 8 out of the past 9 weeks. The index is above its 5 and 10 week moving average is currently 2 points away from crossing above its 50 week moving average. The gold index ended the week trading at $871.20 per troy ounce up $33.80 or 4.04 percent.

Oil ended the week on the downside after pulling back for the 24th week after reaching an all time high in July at $147.90 per barrel. The index is down $110.19 cents per barrel in less than 6 months. The problem that I have is the price of oil took 7 years to move from below $30 to all time highs, but less than 6 months to pullback to those price levels. Why are the prices falling so rapidly as George Bush is getting ready to leave Washington. To end the day of trading in the markets on Friday oil edged higher as the United Arab Emirates stated that they will cut production on oil in order to comply with OPEC. At the close of trading on Friday the oil index ended the week on the downside down trading at $37.71 per barrel down $4.65 or 10.98 percent. We might see a price increases within the next few weeks as production cuts start to come into the market. If the production cuts are not across the board by non OPEC members as well, we will continue to see further declines.

*** Please have a look at the charts below ***

By: Marlin Rolle