Stock Market Update 23 December 2008

918 and 1588.

That is all you need to know.

Welcome to the latest issue of ECAM. Many thanks to those subscribers who wrote to me over the past few weeks with their concerns that I might be dead, or left Emirates for greener pastures or had suddenly decided to shut the blog down. None of the previous apply.

The real reason the blog has not been updated is because nothing has changed. We are still in a severe bear market and even in the short term nothing has changed to make me bullish.


The first chart is the Down Jones World Index (click on all charts to enlarge):

Dow Jones World Index 6 month chart:



This chart appears somewhat busy but the keys to note are that most of the indicators I use have turned short term bullish. However, a buy signal has yet to be generated as price has not been able to break above previous resistance at 174.78.

It now appears to be rolling over again and this may be the start of either a new down leg or a reset of short term overbought conditions to allow a retest of that 175ish level again. In any case, this is the important level that must be broken in order to change this chart to bullish.

Over the past few weeks international markets have performed somewhat better than U.S. markets. Irrespective, there is no way there will be any real stock market advance without the U.S. indexes leading the way. Therefore it is extremely important to monitor the U.S. market action to determine the future direction.

Next chart is the S & P 500 Index:

S & P 500 Index 6 month chart:



The key to note is the resistance at 916-918 has held since early Nov. A closing price above 918 and a rise above the descending trendline is required to switch this chart bullish.


Nasdaq Composite Index 6 month chart:



Same again. Price was repelled at the 1588 level. It needs to close above this level and the declining trendline to turn the chart bullish.


Bottom Line:

There has been no technical change to the investment picture. That may change in the next day or two but as of today we are still in a bear market in all time frames.

My "strategic" positions remain as follows:

-100% BlackRock/MLIM US Dollar Cash Fund (actual positions: USD cash 91%, equities 9%)*


*Strategic allocated percentages are as per how funds were originally allotted. Due to market fluctuations and ongoing equity monthly purchases these amounts vary several % from that posted (refer to current % holdings).

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