Dow Close (Fri) 8,046.42 494.13
Last Friday's close 8,497.31 337.94 (-)
Fri-to-Fri Change = 450.89 (-)
previous FFC = 446.5 (-)
Oil (Fri) $49.93 4.00 (-)
Oil (Last Fri) $57.04 1.20 (-)
Oil (FFC) $7.11 (-)
Friday's "spectacular" close up is being credited, by popular media, as a positive outlook on Obama's announcement that he will announce his White House economic position choices on Monday. However, if you look at the week to week trend - it's still a downward trend. In fact, it's as large as the previous FFC (Friday to Friday Change). Take a look at a 3 month graph of the Dow (Sept to Friday) [2]. The problem, economic trends are of no use to day traders, because they don't emerge until the week is over. Trends appear week to week (specifically FFC), Month to Month, Year to Year, Year to Date, and then historical. Graphical analysis is also available in 5 and 10 years prior. This is, also, of no use to program trading, which use statistical models aimed at tight focus trading.
The other problem, in making calls, as much of the media does, is the hedge fund factor. George Soros, and reports from the BBC stated that hedge funds are deleveraging - so when a hedge fund deleverages (let alone pull out of the market) what does that curve look like. Is it a sharp downturn, followed by a buy at the bottom (the reverse of profit taking on the upside) - with this cycle repeating itself until the hedge funds that can have moved to safety, and the others implode. Soros, a hedge fund star, has predicted an implosion of 75% of hedge funds.
Next, there is market (trader) psychology, which very much follows the mechanisms of herd animals. Taking cues from the lead (a perception) they follow fearing being left behind. Leaders, not there for the benefit of others, become the cowboys herding cattle. Pushing them (the traders) in a direction that benefits the leaders. This curve needs to be identified and mapped as well.
Supporting Quote
[1]
U.S. stocks on Friday rallied on a report President-elect Barack Obama would nominate Timothy Geithner to be the nation's Treasury secretary - MarketWatch
The other problem, in making calls, as much of the media does, is the hedge fund factor. George Soros, and reports from the BBC stated that hedge funds are deleveraging - so when a hedge fund deleverages (let alone pull out of the market) what does that curve look like. Is it a sharp downturn, followed by a buy at the bottom (the reverse of profit taking on the upside) - with this cycle repeating itself until the hedge funds that can have moved to safety, and the others implode. Soros, a hedge fund star, has predicted an implosion of 75% of hedge funds.
Next, there is market (trader) psychology, which very much follows the mechanisms of herd animals. Taking cues from the lead (a perception) they follow fearing being left behind. Leaders, not there for the benefit of others, become the cowboys herding cattle. Pushing them (the traders) in a direction that benefits the leaders. This curve needs to be identified and mapped as well.
Supporting Quote
[1]
U.S. stocks on Friday rallied on a report President-elect Barack Obama would nominate Timothy Geithner to be the nation's Treasury secretary - MarketWatch
[2]
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