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AbitibiBowater Inc’s (NYSE:ABH) NYSE common stock price has declined significantly since our last update report as well as 12.9% in a single trading session on 17 September 2008 attributable to weakness in global equity markets. Although the company’s rising input costs have impacted margin expansion, we are optimistic about the company’s future performance given [...]
On November 20th the S&P closed at 752. In the context of the last fifty eight years this is the worst performance the S&P has ever recorded. In 14,368 data points, the past six weeks rank 14,349th to 14,368th with respect to S&P performance relative to its moving averages (20-, 50-, and 200-day MAs). On the day it closed at 752 the S&P finished 19.6% away from its 20-day MA, 33.8% from its 50-day MA and a staggering 65.4% from its 200-day MA. The only other year in recent memory to come as close was October 3rd 1974. Then the S&P closed 7.7% away from its 20-day MA, 16.6% from its 50-day MA and a comparably bullish 40.1% away from its 200-day MA.
For the month of December, taking the post September/October routs into perspective, 1987 was the only other year coming close to matching now. Then the S&P lingered 2% from its 20-day MA, 11% from its 50-day MA and only 25% from the 200-day MA (this was for December 10th 1987).
Bears and worried bulls could look to December 1973 when the S&P traded 3% from its 20-day MA, 11% from its 50-day MA and 14% from its 200-day MA - only to see the following year perform even worse. Will this be the story for 2009?
The most likely outcome is somewhere in between as the market drifts sideways as the moving averages 'catch up' to the market. One month on from my "Obama Bottom" article the S&P has completed the Obama unwind and should be in a position to rally from here into the early part of next year. But given the new boundaries of despair the S&P has set I wouldn't be betting big on it.
Just for interest, the best the market performed was November 3rd 1982 when the S&P traded 5% above its 20-day MA, 11% above its 50-day MA and 19% above its 200-day MA. Those numbers appear a million miles away from where the S&P stands now.
Have an opinion you would like to share? Make a call on your favourite stock. Here's the call spread for Bank of Ireland (BKIR)
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website
The latest Zignals YourCall feature has three (well four) front-runners from our community.
Heading the list with seven calls is Bank of Ireland (BKIR). Since my initial call, rumors of "investment" in the bank have helped push the stock out of its short term downward turn.
The Zignals outlook based on the seven calls is 100% bullish:
Second on the list is Microsoft (MSFT). Will a push towards home entertainment over the coming holidays help boost XBOX 360 sales?
Of the four calls, one was bearish and four were bullish. All four calls exited with one by Milkob reaching its target (bullish) price for a 2.9% gain in one day.
Third on the list was Allied Irish Banks (AIB). Tuesday looks to have cleared a resistance level dating back to early October. This comes after Credit Suisse revised targets for AIB down to €1.00 from €3.20 and Bank of Ireland to €0.80 from €2.00.
On the Zignals community I have entered a 6-month call for a push back into the supply zone in the low €7s. User Amergin is looking for €3.00 on his call while the remaining two calls (an earlier one by myself) were exited at a target price and stop price (mine exiting at the stop). Amergin's stop is at €2.00, mine is at €1.89.
Fourth on the list was for Google (GOOG). The company announced it was to cut the number of contract workers it uses. From a price perspective it has made steady steps down. Whether it can find support here will depend on breaking declining resistance over the next couple of days.
On the YourCall front there was one stop hit at $275.59 by TommyJol. Of the remaining three calls there is a bearish call for $237.31 with a stop at $289.22, my recent call for $369 with a stop at $244, and a call by Milkob for $274.39 with a stop at $207.65 which may exit on Tuesday.
If you have an opinion on these stocks or others we would love to hear from you. Further information and charts are available by our real-time watchlist available below which is fully customisable by Zignals users.
Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website
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