The stock market report

the stock market report Trading lessons

Last updated: Tuesday, 02-Jun-2009 01:15:52 EDT

T he stock market is moving lower. Here’s what the last report I wrote said (23 January 2005):

“The first three weeks on January 2005 have been down weeks. Unless the market can make a decent move to the upside soon, the rest of the year might not go well for the U. S. stock market.”

What happened next?

The market decides to go higher. Almost as soon as I finished writing the last report, the US stock market reversed to the upside.

Within a month and a half, the S&P 500 was making new 52 week highs. Those new highs didn’t last for long though. Almost as quickly as the new high was made, the market(s) reversed to the downside.

Within just the last few days, the S&P 500 made a slightly lower low than the January 2005 low.

The market “bounced” mid-week, but failed to follow through.

Friday’s price bar was an outside reversal bar – to the downside.

Consider this. The Dow Jones Industrial Average is sitting right on top of the psychologically important 200 day moving average.

There are plenty of people who watch and react to prices at the 200 day moving average.

I also keep track of the momentum stocks as an indicator of overall stock market conditions.

Look at these stocks that have lost favor.

The online auction giant Ebay has taken a beating this year. Sure, the long term investors who bought EBAY a few years ago are still doing fine, but what about the traders who bought – and are still holding on from earlier this year. They are down a third.

TravelZoo Inc, an internet related company, jumped from less than $10 per share last year at this time to more than $110 per share at the end of 2004.

Where is it now? At $54.

I could go on, but I think you get the picture.

What’s my take on all of this?

Very simply, lower prices.

If the market, as measured by the S&P 500 trades through the recent low at 1163.69, then I think the most recent high is the high for the year.

That’s right, the high for the year!

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