December 31, 2007
Major indexes opened the day in the red, and never looked back as they hit their lows during the lunch hour, and then rallied, but come the end of the day investors did some last minute portfolio adjustments and sent the market down once again closing near their lows of the day. On the whole the indexes were on average off about three-quarters of a percent. We encourage our readers not to look too far into today’s action as there are a lot of last minute adjustments portfolio managers were making for tax-benefits, etc.
Here’s what you need to know about the new year: January is typically a barometer on the year ahead. If January is positive, you can expect the year to be positive. If January is down, you can expect the year to be down also. This works about 75% of the time. Since 1950, every down January was a precursor to a bear market on the year and at best a flat market. So you can be sure that investors and traders alike will have their eyes on how this month turns out.
The first couple of days of the new year are typically positive and we should see this continue on Wednesday.
Let’s review the charts…
NASDAQ opened down and never looked back. We closed below the 50-day moving average, but we don’t consider this to be a major concern, as this moving average, recently, has been a poor indicator of support and resistance.
The S&P followed suit closing near its lows of the day. Support levels for this index on a short-term basis will be the mid-December lows. Recent history suggests that the first couple of trading days for the new year should be positive for the index.
