February 5, 2008
The types of days that we saw today are becoming the norm for Wall Street. After having the best week in the market since 2003, last week, the market decided to switch direction this week and move lower, getting ever closer to the January lows from last month. An ISM Services report came out today and was dramatically lower than what was expected. A reading of 44.6 gave investors worries that the economy may very well be contracting and heading towards a recession. Once the market opened up this morning, it never looked back, with the major indices closing down to the tune of about 3% across the board.
This move to the downside is not entirely unexpected, in fact, for almost two weeks now, we have been stating on our daily market analysis that we believe we will, at the very least, test last month’s lows again. If they hold, we would expect to see the bulls gain control of this market. However, once we test those lows, if they do not hold, and we break through them decisively, it is likely that the markets will be very problematic for investors.
While we’re not saying at this point, to sell everything you have, we are warning our readers to exercise caution in these markets. Don’t over commit you capital, and try to buy all at once, the stocks that are presently on sale. Just because they may be ‘cheap’ doesn’t mean that they can’t get cheaper.
Let’s review the charts…
NASDAQ was unable to hold its own, as it gapped down to begin the day, and sold off continuously throughout its remainder. At this point, the markets will be driven by the economic reports hitting the markets, as further reports of weakness in the general markets, could have us seeing more days like today.
The S&P was the biggest decliner among the major indices closing down 3.2%. After yesterday’s bounce off of the upper channel line, the index continues to progress downwards, and it is likely we will see further follow through in the morning.
We are currently working on adding a new feature to the website called the “Shareplanner Stock Screener”. We believe that this feature will give our readers more tools at their disposal and ideas for various types of stocks to trade and invest in regardless of the market conditions. Stay Tuned!