US Market Analysis -- 29th Dec 08

DJI closed 8,515.55 for the week ended 26th Dec 08, down 63.56 points or 0.74% from previous week.
Nasdaq closed 1,530.24 for the week ended 26th Dec 08, down 34.08 points or 2.18% from previous week.
S&P500 closed 872.80 for the week ended 26th Dec 08, down 15.08 points or 1.70% from previous week.
Crude oil price finished the week at US$37.90/barrel as compared with previous week of US$42.91/barrel.

For the week of Christmas, US markets were traded in a narrow range and thin volume despite of bad economic data. Fund managers were mainly away on holiday, investors were also in festive mood and no catalyst to engage in opening new positions. The 3 automakers got the bailout from President George Bush and furthermore GM also been transformed to a holding company which means it can tap on US Federal Reserve for financial aids like those troubled banks which were transformed to holding company.

A recap of last week US economic data/event is as followed.

1. 23rd Dec 08, 3Q08 GDP final revision came in -0.5%, consensus -0.5%, previous value -0.5%.
2. 23rd Dec 08, Consumer Sentiment reported 60.1, consensus 58.6, previous value 59.1.
3. 23rd Dec 08, Existing Home Sales came in 4.490M, market expect 4.900M, previous value 4.98M.
4. 23rd Dec 08, New Home Sales came in 407K, market expect 420K, previous 433K.
5. 24th Dec 08, Durable Goods Orders reported -1.0%, consensus -3.0%, previous -6.2%.
6. 24th Dec 08, Personal Income reported -0.2%, consensus 0.0%, previous 0.3%. Consumer Spending reported -0.6%, consensus -0.7%, previous -1.0%.
7. 24th Dec 08, Jobless Claims came in 586K, consensus 552K, previous 554K.
   

Economic data/events for the coming week is as followed

1. 30th Dec 08, Consumer Confidence
2. 31st Dec 08, Jobless Claims
   
3. 2nd Jan 09, ISM Mfg Index

Technically, DJI long term trend is neutral and short term wise it is more towards the downside. Any downside should be well contained as suggested by the DI pair and ADX signal. DI pair still negatively spaced but with ADX flattish around the 25 level, the downside is lacking in strength. RSI and Stochastic are cutting down hence suggesting short-term is more bias towards downside than the upside. The immediate support is the 8,150 level and immediate resistance is the 9,000 level.


Technically, Nasdaq long term trend is neutral and short-term wise is bias towards the downside. The DI pair still negatively spaced but with ADX flattish near the 20 level, the downside shall be well contained. RSI and Stochastic have cut down and yet to show sign of reversing up indicating short-term trend is more on the downside. Currently, the immediate support is at 1,400 level and immediate resistance is 1,600 level.


Technically, S&P500 long term trend is neutral but with short-term trend towards the downside. The DI pair is still negatively spaced but with ADX flattish near the 20 level, downside shall be well contained. RSI and Stochastic have cut down and yet to reverse up hence short-term is bias towards the downside. Current immediate support level is 815 and resistance level is 920.


For the coming week, it is just 3 days away from end of 2008. So far most of the bad news were pretty well absorbed by the markets hence with a relatively cheap valuation of the US market, the traditionally year end rally and capricorn effect might still be possible. However, with uncertainty in the US economy for year 2009, a strong rally might be difficult.