The
Weekly Report for January 14th - January 18nd, 2008
January 13, 2008- Market Summary
In our last report, we mentioned that record-high oil and gold prices
combined with the concern of an upcoming recession
helped fuel the Dow's worst start to a new year in history. These
concerns will continue to dominate the minds of market participants
as we head into the heart of earnings season. It would not be surprising
to see the heightened volatility remain for a few more weeks given
the number of companies getting ready to report. As you can see
from the charts below, the major indexes continue to look weak and
they are now all trading below the resistance of their respective
200-day moving averages. The chart of interest this week is of the
Dow because the 50-day moving average crossed below the 200-day
moving average, which is a common signal of a long-term shift in
trend. It seems like the Dow is finding some short-term support
at the 12,600 level, but it would be extremely risky to bet on a
bounce at this point. We expect the selling pressure to continue
as market participants continue to determine the extent of the weakening
economy.
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