What's the Market's Next Move?
by Sam Collins 10/16/09
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As a result of the back-and-forth trading with prices confined in a narrow and orderly trading channel, investors were able to anticipate with an amazing degree of accuracy (for stocks) the trading zones in which to buy and sell. These zones are now so well established that any violation of them would be highly unlikely without a complete reversal in trend.
I estimate that we are now within a day or two of making a minor top at around 1,100 and could even run to the market's intermediate target of 1,120. After reaching that target, look for a reversal to the first zone of support, starting at 1,070, which is the approximate high of the last resistance point made in September. And under that, the final support at 980 to 1,010, which, if broken, could be crushing, taking prices down to the 200-day moving average at 908.
I mention the zones not because I think that they will be met, but to illustrate how deep the overall support for the current run-up in prices really is. This sort of predictability and orderliness usually means that heavy buying is moving stocks forward and upward, and that the overall advance could go on to target 1,245 with the same degree of high resolve.
Today's Trading Landscape
Earnings to be reported include: A.O. Smith Corp, AMCOL International Corp., Asia Cement Corp., Bank of Marin Bancorp, First Horizon National Corp., Genuine Parts Co., Halliburton, Heritage Oaks Bancorp, Mattel, Prosperity BancShares and Sensient Technologies Corp.
Economic reports due: Treasury international capital flows, industrial production (the consensus expects 0.2%), and Reuters/University of Michigan consumer confidence (the consensus expects 74).
Late news: Bank of America (BAC) reported Q3 earnings of 26 cents versus an estimated 21 cents. General Electric (GE) reported 23 cents versus an estimated 20 cents. Google (GOOG) reported $5.89 versus an estimated $5.42.
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