The FRED Report

Financial Research, Education & Data

The FRED Report is not authorized, endorsed or affiliated with the Federal Reserve of St Louis and its FRED Economic Data

The Fred Report - Mid Week Update December 21, 2011

 | 
author/source: Fred Meissner, CMT


Previous    Next


The FRED Report – Financial Research, Education & Data

Mid Week Update

 

Volume 3, Issue 102

December 21, 2011

 

Download PDF Version here


Update of Market View

In the Weekly, we mentioned that we wanted to see some better action, and the market has responded in kind! We are still working on our yearend piece, but so far the technical indicators looks a bit better to us than we would expect, given the lousy fundamental backdrop. The reason for this can be that the markets often discount fundamentals. However, another reason could certainly be that the market does not UNDERSTAND the fundamentals. Fortunately, the daily chart of SPY (and other indexes) has a potentially interesting pattern with reasonably clear bullish or bearish benchmarks. I like this pattern because it is not being widely discussed, and therefore has a better chance to be valid. The pattern is an Inverse Head and Shoulders (Head and Shoulders Bottom). The left shoulder is the August 9 – September 21 period. The head is September 22 – October 7, and the rest of the pattern comprises a higher right shoulder.
It is also possible that another Inverse Head and Shoulders has formed on the charts. That one has a left shoulder From November 1 to November 16, the head is November 17 to November 30, and the right shoulder is the remainder of the chart. Both patterns are somewhat clearer on the daily chart of the NYA. Both patterns appear on most of the other indexes as well. While uncommon, especially an inverse, a Head and Shoulders within a Head and Shoulders has occurred before, and has bullish implications. Perhaps more important are the benchmark prices we mentioned, as these define risk, and suggest potential reward.
Should the markets exceed the low of November 25, both inverse patterns will likely be broken, and stocks could test and likely exceed the October of 2011 low. On SPY, this is 116.20 and is approximately 6% from the December 20th close. Readers can certainly look at the other indexes. In terms of reward – the neckline on both patterns is the same – 127.50 to 130 on SPY, 7900 roughly on NYA, 75 to 77.50 on IWM, and 165 to 168 on the MDY – in other words, the recent resistance on the daily charts. Should these areas be exceeded the reward could be 12% or more. 
Right now, indicators suggest that the resolution of these patterns will be to the upside – but the beauty of the patterns is that the market will tell us which it is going to do. We remain with our forecast of a close at the 1220 area, slightly down from December 20th’s close. The market looks choppy into the end of the year. But, should these levels be breeched in either direction, a move of significance would be underway.


Other Points of Interest
 

We show, once again, the weekly charts of the indexes we are monitoring to show where the resistance is on the stock market. Should these areas be exceeded (NYA 7700 – 8000, IWM 77 – 78, MDY 168 or so), it would be another strong indication that the market is going to have a strong first half of 2012. Please compare these charts to the previous section.

  
 
 


 




DISCLAIMER: 
Fred Meissner is primarily responsible for the research in this report and certifies that: (1) all of the views expressed in this research accurately reflect his personal views about any and all of the subject securities or issuers; and (2) no part of his compensation was, is, or will be directly or indirectly related to the specific recommendations or view expressed him in this research.
 
This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described in this report.  Interested parties are advised to contact the entity with which they deal, or the entity that provided this report to them, if they desire further information.  The information in this report has been obtained or derived from sources believed by Fredco Holdings, Inc. to be reliable, but Fredco Holdings, Inc. does not represent that this information is accurate or complete.  Any opinions or estimates contained in this report represent the judgment of Fredco Holdings, Inc.  at this time and are subject to change without notice.  Fredco Holdings, Inc.  or its employees, officers, directors, principals, agents, affiliates or adviser may from time to time provide advice with respect to, acquire, short sell, hold or sell a position in, the securities or instruments named or described in this report.
 
Fredco Holdings, Inc. does not have investment banking relationships with any of the companies mentioned in this report and does not conduct investment banking business, in general.  Fredco Holdings, Inc.  and its employees do not receive compensation of any kind from any of the companies in this report.  Fredco Holdings, Inc. , its directors,  officers, principals, agents, advisers, affiliates and employees may maintain a financial position in the securities mentioned in this report, provided however that no buying or selling  activity will be taken with respect to a security referenced in a report by such parties within three days of such report’s publication.
 
The information contained herein was prepared by Fredco Holdings, Inc., which is solely responsible for the contents of this report.
 
Copyright 2010-2019 Fredco Holdings, Inc..  All rights reserved. This report is a publication of Fredco Holdings, Inc.  located at 4514 Chamblee-Dunwoody Rd, Suite 112, Dunwoody, GA 30338. 

 

 

 

Who is Fred Meissner, CMT?
Listen here: