Is Market Prepping For An End Of Year Rally?

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 0

Now is the time to begin looking at getting long this market and if we get a big confirmation move within the next week, it may even be time to get a bit aggressive.  About one week ago on October 10th we got a major capitulation move but I was a bit wary of the move due to the late day fizzle and a close in the red for the Dow and S&P.  However, it was enough to propel the Dow nearly 1500 points in just two trading days and close to major resistance levels.  I urged my members to avoid chasing the initial rally if they weren’t already in position. 

"If you did not begin dabbling in positions late last week, it’s critical that you be careful up here.  Do not chase this rally!
We’re up 1500 points already off Friday’s low and while there is room to run in the Dow between 400 – 800 points, it’s best to buy on the significant pull backs."

We got the significant pull back off the initial surge last week and successfully tested the lows on Thursday, reversing with good volume.   I sent the following, in part, to members Thursday night:

"If today’s low wasn’t the bottom, I’m willing to say its darn close.  Today’s move is the kind of move that could help propel the market into a 15 – 20% rally from here to the end of the year, but we’ll need a few more days of light volume on the sell side and another day of accumulation to confirm .  I’ve been less than enthusiastic about previous capitulation attempts of this market, but today’s move was much better as buyers stepped up big all the way to the final bell.  That’s something that had been missing particularly last Friday when we had a similar move, but fizzled at the end of the day.  The only thing wrong with today’s move was the lack of massive volume but it may be enough."

I like this market here and have begun adding more long exposure in recent days, but before I get more aggressive on the long side, we need confirmation of Thursday’s move with a big up day with volume within the next week or two. 

I’ll take another look at the charts in a few days.   Good trading out there this week! 

If you’d like to receive my detailed market reports a few times a week as well some ETF trade ideas, you may sign up in the upper left.  It doesn’t cost a dime!

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1.Major Airlines: 38.80%
2. Diversified Investments:  26.60%
3. Oil & Gas Pipelines: 22.25%
4. Banks – SE: 20.80%
5. Health Care Plans: 19.40%
6. Air Services – Other: 16.50%
7. Surety & Title Insurance:  14.25%
8. Dairy Products: 14.10%
9. Banks – Midwest: 12.95%
10. Foreign Utilities: 12.85%

– Top 10 Worst Performing Industries For the Week –

1. Silver: -16.65%
2. Long Term Care Facilities: -15.85%
3. REIT – Diversified/Industrial: -14.30%
4. Recreational Vehicles: -13.75%
5. REIT – Retail: -13.45%
6. Gold: -13.05%
7. REIT – Residential: -12.25%
8. Auto Parts: -11.10%
9. Jewelry Stores: -11.00%
10. Auto Dealerships: -10.05%

– Top 5 Best Performing ETFs For the Week –

1. Chile Fund (CH) 31.15% 
2. Morgan Stanley Frontier Markets (FFD) 22.85%
3. Latin America Discovery Fund (LDF) 22.05% 
4. Turkish Invest Fund (TKF) 18.50%
5. Herzfeld Cuba (CUBA) 17.60%

– Worst 5 Performing ETF’s –

1. Market Vectors Gold Miners (GDX) -17.65%
2. Asa Gold (ASA) -16.85%
3. Central Fund of Canada (CEF) -15.75%
4. US Oil Fund (USO) -10.75%
5. iShares South Africa (EZA) -10.10%

::: Upcoming Economic Reports (10/20/2008- 10/24/2008) :::

Monday:        Leading Indicators
Tuesday:       None
Wednesday:  Crude Inventories
Thursday:      Initial Claims
Friday:           Existing Home Sales

::: Earnings I’m Watching This Week :::

Monday: American Express (AXP), Nabors Industries (NBR), New Oriental Education (EDU), Petmed Express (PETS)

Tuesday: 3M (MMM), Ametek (AME), Apple (AAPL), Coach (COH), Icon (ICLR), Illumina (ILMN), Yahoo (YHOO)

Wednesday: Alcon (ACL), Amazon (AMZN), (BIDU), Axsys Technologies (AXYS), Covance (CVD), Covanta (CVA), EMC (EMC), Genzyme (GENZ), Omniture (OMTR), Pulte Homes (PHM), Ryland (RYL)

Thursday: Airgas (ARG), Bucyrus (BUCY), Cash America (CSH), Celgene (CELG), Cybersource (CYBS), Deckers Outdoor (DECK), Diamond Offshore (DO), EMCOR (EME), Flir Systems (FLIR), MEMC Electronics (WFR), Microsoft (MSFT), Monolithic Power (MPWR), Terra Industries (TRA), Terra Nitrogen (TNH), Trimble Navigation (TRMB)

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