Nasdaq closed 2,273.90 for the week ended 19th Sep 08, up 12.63 points or 0.56% from previous week.
S&P500 closed 1,255.08 for the week ended 19th Sep 08, up 3.38 points or 0.27% from previous week.
Crude oil price finished the week at US$102.73/barrel as compared with previous week of US$101.05/barrel.
A recap of last week economic data/event is as followed.
- 15th Sep 08, Industrial Production reported -1.1% compared with previous value of 0.2% and market consensus of -0.3%.
- 16th Sep 08, CPI came in -0.1% from previous value of 0.8% and market expectation of -0.1%.
- 16th Sep 08, US Federal Reserve maintained its Fed Fund rate at 2.00% but market was expecting a cut of 0.25% to 1.75%.
- 17th Sep 08, Housing Starts reported 0.895M as compared with previous value of 0.965M and a market expectation of 0.950M.
- 18th Sep 08, Jobless Claims reported 455K, market expecting 440K and previous value was 445K.
- 23rd Sep 08, State Street Investor Confidence Index
- 24th Sep 08, Existing Home Sales, Bernanke to testify on US economy to Congress
- 25th Sep 08, Durable Goods Orders, Jobless Claims, New Home Sales
- 26th Sep 08, 2Q08 GDP ( final revision )
Wall Streets spent the whole of last week mainly focus on the financial status of the troubled banks. It started off with news of Lehman Brothers unable to seek a last minute buyer to its rescue and ended up filing for bankruptcy protection to AIG in urgent need of cash to survive. Markets suffered sharp drop in reaction to that. A short relief was then followed when US Federal Reserve decided to pump in US$85b to AIG in exchange of 79.9% of stake. However, that did not stop the market from worrying which troubled bank is the next to fall and fear finally struck the caused another sharp drop on 17th Sep 08. It is only when a co-ordinated efforts from global central banks ( Bank of Japan, European Central Bank, Bank of England, US Federal Reserve, MAS, etc ) all simultaneously injected more monies into the markets, NYSE curb short-selling of financial stocks and a Bush administration proposal of almost 1 trillion dollar to bailout troubled banks that made the markets a V-shape recovery within the week and enable the indices to close flattish for the week.
Technically, the rebound enabled DJI to close near the 50d EMA level after dropping to a low of around the 10,400 level. The DI+ is trying to cut up to the DI- but the ADX still below 20 indicating not much strength in the upwards direction of the market to break the 11,800 level. MACD is showing sign of convergence and MACD histogram is moving towards the zero line but they are still in the negative region. RSI has just moved up to 50% level probably suggesting the current rebound is of moderate strength. Stochastic has managed to recover from below 20% level and moving towards the 50% level. The indicators are currently showing short-term DJI might have some more upside and probably capped at 11,800 level. Previously, DJI was ranging between 10,800 to 11,800 level until the breakdown outside of the range on 16th Sep 08. Hence, it should remain cautious that DJI might breakdown from the range again if any bad news surfaced again.
Nasdaq closed at around the 50d EMA level for the week recovering from an intra-day low of around 2070 on 18th Sep 08. The DI+ and DI- in the ADX chart is moving in a direction that DI+ closing in to crossover the DI-. The ADX is around the 30 level indicating a certain strength in the crossover to be happened. MACD signal also showing convergence and MACD histogram is moving up to the zero line but both still in the negative region. Stochastic has cut up from oversold position and moving towards the 50% level indicating the rebound still have some more upside. RSI is moving towards the 50% level also further indicating the strength in the rebound. The immediate resistance for Nasdaq would be the 100d EMA level at 2348 and the eventual level of 2475 when it failed to breakout from there in past 3 months. There was also a gap up between 18th - 19th Sep 08, hence potentially, Nasdaq will retreat to cover back the gap. Short-term support or downside for Nasdaq would be the 2070 level. Even though indicators are showing sign of rebound and further upside, any bad news in the financial sector could cause Nasdaq to drop to re-test that level also.
S&P500 also closed around the 50d EMA level for the week after recovering from an intra-day low of 1134 on 18th Sep 08. DI+ is moving to cut up to DI- in the ADX chart with the ADX at around 30 level, indicating some strength in the convergence move. MACD signal showing sign of convergence and MACD histogram moving towards the zero line but both of them still in the negative region. Stochastic has cut up and moving towards the 50% level indicating the rebound should have some more upside. RSI is at around the 50% level further indicating the strength of the rebound. The immediate resistance would be the 1300 psychological level which it failed to breakout in the past 3 months. As S&P500 consists mostly of financial stocks, any bad news to the financial sectors would potentially cause the S&P500 to retreat and re-test the 1134 level and this is the short-term downside risk for the moment.
For the week ahead, the main focus will still be on the health of the financial sector. Currently, market is still concern over the outcome of Morgan Stanley ( who will it be merged with ), Washington Mutual ( source citing Citigroup is going to acquire it ), Goldman Sachs ( will it having trouble like Morgan Stanley ) and any possible troubled banks surfacing next to announce in need of cash to survive. Should be another volatile week ahead.
