Daily market commentary for Wednesday, Sept 27, 2006

Posted on Tue 26th Sep, 2006 10:16:54 PM

***Written By: Teresa Appleton Stock Forum ID: Teresa***

Tuesday continued Mondayâ€™s rally. Volume improved to give us another accumulation day on the NYSE and Nasdaq. S&P 500 put in a new 5 Â½ year high after knocking at the door for the past seven days. The Dow also impressive with a close (11669.39) right at Mayâ€™s highs and just under the all time high, which is 11, 722.98 from January 14, 2004. The Nasdaq is still lagging behind and hasnâ€™t even retraced to 70.7% of the years range. While the other broader markets are beyond the years highs and looking for all time or multi year highs.

Crude closed down 44 cents at $61.01 after seeing $62.00 earlier in the session. So oil is still not pressuring anything, but inventory data is out Wednesday which may add some volatility. Gold rallied nicely closing up $1.20 on the day at $597.10. Nice move on the XLE and OIH as we talked about last night and into resistance, I’ll leave this alone for a day while inventories come out and then revisit it later in the week.
said last night we would open at resistance and we did. This market was grinding all the coffee in Columbia and then FINALLY moved and to new highs. But it was anything but easy and gave me the feeling of â€œOH heck it is month end and end of the quarter did we miss somethingâ€ mentality. Mondayâ€™s big volume and rally may have been the result of onset fear and pushed us today. OK OK OK yes Consumer Confidence was good, but not GREAT by any means and it was an excuse because it was NOT bad to continue Mondayâ€™s action. Most the day was very digestive and unbelievable chop and whip before we moved. This was expected and we talked about this. So now what is next?
Wednesday we have a bit more economic data and that will play a part in the volatility on the day. But more than anything we are seeing this Nasdaq lag and not lead. Definitely a problem and makes me a little leery of the action up here. There is also this thing called and this is NOT my statement because I happen to not allow this word in my house (I have kids). But there is a thing called STUPID money. Which basically means Iâ€™ve missed the rally so Iâ€™m just jumping in blindly and buying anything in sight. Smart money leaves when this starts happening so we need to proceed cautiously until we see the Nasdaq take hold and join the other broader indexes. I am by no means saying this is the top or disaster lays ahead, but we need to proceed cautiously until we see a market with proper leadership and out of the hysteria of end of quarter action.
Wednesday I will not be surprised to see us open down and then climb back up the wall of worry. Pre market economic data will be volatile then things could slow down to find us waiting on Oil inventories. Also Tuesday was digestive but not as tight as I had hoped the range would be to wind us up some for late week. So Iâ€™m concerned weâ€™ve put the cart before the horse and weâ€™ll see some dead action for parts of the day to help the market digest as it goes. Donâ€™t press buttons out of boredom, we are finding plenty to play, just requires patience.
Some earnings for next week of interest: Wednesday pre market MKC and nothing after the bell. Thursday pre market AM, FDO and after the bell CAN, ESIO, RIMM, TXI. Friday pre market MAG.
Economic data: Week of September 25^th â€“ September29^th Wednesday 08:30 Durable Orders, 10:00 New Home Sales, 10:30 Crude Inventories, Thursday 08:30 Chain Deflator-Final, 08:30 GDP-Final, 08:30 Initial Claims, 10:00 Help-Wanted Index, Friday 08:30 Personal Income, 08:30 Personal Spending, 09:50 Mich Sentiment Rev, 10:00 Chicago PMI

Lets look at some charts:
NDX (Nasdaq 100) closed +8.83 at 1659.20. Support: 1642.56, 1632.09, 1627.66 200dma, 1623.43, 1617.64. Resistance: 1661.32, 1680.52, 1701.98 and 1721.13.