March 4, 2008
Déjà Vu….Like yesterday, a flurry of late afternoon buying brought the markets off their lows, and we managed to close the day with a small loss in the S&P and a negligible gain in the NASDAQ. Stocks were weak throughout the morning Tuesday as a result of comments from Fed Chairman Bernanke and negative news regarding Intel (INTC) and Citigroup (C). However, bulls found their second wind late in the afternoon in response to optimistic words from Cisco’s (CSCO) and a report that indicated a bailout plan for Ambac (ABK) is nearing. Tomorrow brings a barrage of economic reports with the Productivity Report, February’s Factory Orders, ISM Services Index, and the Energy Information Administration’s weekly crude report.
Today market action didn’t provide much insight into immediate future market trends. Volatility continues to rise which would indicate fear is increasing, and we may see a capitulation in the near future. We have been patiently waiting for this event and expect a rally shortly thereafter. It’s tough not to try to pick a bottom under these conditions or buy during the morning selling in anticipation of a late day rally, but the prudent investor who waits for the right price to buy, will reap the rewards. Valuation is the key! Certain stocks (sectors) have begun to reach attractive valuations even with the prospects of a worsening economy on the horizon. Remember be patience and you will be profitable!
Let’s review the charts…
The NASDAQ rallied to finish flat for the day. After yesterday’s breakout below the bottom of the triangle wedge, it will need to consolidate and regains to move forward. If not, look out below.
The S&P was basically unchanged but closed with a 4 point loss for the day. It is trying to consolidate a form a new support level.