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Author Topic: Market Commentary - Jan 20, 2011  (Read 685 times)
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Capitalist Pig
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Posts: 17830

« on: 2011 Jan 20, 10:30:18 pm »

After an unscheduled, snow-induced vacation, I am back with my market commentaries. Lucky you! Smiley

It's been an interesting two weeks. The dollar seems to have hit resistance and retreated. Silver broke out of its trending channel and has gone lower. Gold is off. Equities as a whole are off. Unemployment seems good one week and bad the next. All kinds of news stories are coming out about the strength of China and the ghost cities of China. It's enough to make your head spin. 

So what to do?

Follow the numbers. The reason charting is used by technical analysts is that the chart reveals the overall market sentiment at any given time. Sure, CNBC might be squawking about profit-taking or dollar concerns, but when you get down to it, it's about making money. Form follows function.

Let's look at the numbers for today:

US Dollar ETFGoldSilverDow 30S&P 500
22.68+0.31%  1312.00-1.88%  27.39-4.23%  11,822.30-0.02%  1,280.80-0.13% 

Right now it is both earnings season and options expiration.  Large companies are reporting earnings each day, which often generate large swings in the markets. The other day Apple reporting fantastic sales numbers and the fact that Steve Jobs will be stepping back from day-to-day operations due to health reasons. Since Apple now accounts for 20% of the NASDAQ indices, it had a huge effect on the markets. Google just reported somewhat better than expected earnings and a shake-up in management structure. In technical terms, these are "emotional events" that are usually temporary. Sometimes they will initiate new trends though. It's a voltatile time that bears close observation.

Options are expiring tomorrow, and that means that large institutions like to make free money by shorting hard when they can get away with it. It is much easier to make a market fall through naked shorts than it is to raise a market through naked longs. As they say, the bull goes up the stairs but down the elevator. Especially in a weak market like we have now, large trading firms and banks like to take the opportunity to push the markets below convenient strike prices.

This recipe makes for good buying opportunities on anything you like for a longer term play.

Happy trading!

Neal McSpadden
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