Wall Street Continues to Hibernate

February 11, 2008

The results of the past couple of days in the market is something that investors as of late, have undoubtedly become unaccustomed to – a quiet day! With little in the way of news, outside of a news piece that confirmed Yahoo!’s rejection of Microsoft’s buyout, the indices wasn’t going to give us much of anything.

We should see volatility return later this week as Bernanke will be speaking, and we can be almost certain the market will react, whether it is in a positive or negative fashion. However, to expect the same help as we have gotten as of late from the Fed is unrealistic, but that is exactly the kind of dependency the market has created for itself. Many will be advocating for another 50 basis point cut, and we could very well get that once again, but eventually, the Fed is going to run out of ammo, and the problems that we have been putting off these past few months will return, and when it does, it is unlikely, that we will be as well-equipped to fight those problems. That is why we are of the point of view that it may be in Fed’s best interest to allow for some short-term pain in the economy in general and the markets in particular, in order to better create an environment for long-term success. Investors refuse to see it from this angle, and it is likely that the Fed will either. But eventually they will have to slow down the pace at which they are cutting rates – and we very well, may begin to see this at the Fed meeting next month.

Let’s review the charts…

The NASDAQ was very quiet today as it appeared most decided to take the day off. While the NASDAQ led the indices to the upside, no one is really going to be suckered into the belief that this was a confirmation of a long-term bottom being put in. So be wary of any near-term momentum without the volume to support such a move

The S&P continues to trade within a narrow channel and we should see an eventual breakout of the trading range once we get a significant market development (which could come as soon as this week when the Fed Chairman speaks).

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!