Chartology - The End Or Just The Beginning
Did the Fed's emergency move Tuesday morning dramatically change the future of your money or simply stand in the way of the inevitable?
The stock market is probably the best predictive mechanism we have and it's been trying to tell us a few things for a while now:
- We're probably in a recession.
- Banks own too many worthless subprime securities.
- Retailers are running out of customers.
- The place your money belongs could be gold.
What lies ahead?
Louise Yamada, Managing Director of Louise Yamada Technical Research Advisors joins the panel for this conversation. Following is a synopsis of her main points.
CHART - S&P from 2003 to Present
We’re probably a long way from seeing positive divergences from lows in the S&P, says Yamada. I think we have a long way to go before it recovers. Sell into strength, she counsels.
Natexis Bleichroeder Technical Analyst John Roque also joins the panel. Following is a summary of his main points.
CHART - Financials As A Percentage Of The S&P 500
I anticipate more pain to come for financials, says Roque. More importantly, I think we're seeing the early stages of the long-term shrinkage of an industry (the financials) that will find itself much less important both in our economy and as a percentage of the S&P 500.
CHART - Percentage Of Stocks Above Their 200-Day Moving Averages
This chart may show good news, says Roque. Historically, when we have reached points where only 15% of NYSE stocks are above their 200-day moving averages, that has meant we were approaching the market low. Currently, we are near that 15% mark, which may mean the low is in sight, he adds.
CHART - Gold With 200-Day Moving Average
Gold remains in a long-term uptrend, says Roque. It looks bullish relative to stocks, and should be firm in the face of continued uncertainty for global equity markets, he concludes.
The gold story scares me, says Guy Adami. Trading gold typically ends in tears.
For an in-depth look at the charts used in this analysis please watch the video.
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Trader disclosure: On Jan 22, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (YHOO), (INTC); Finerman Owns (GS), (M); Finerman's Firm And Finerman Own (HD); Finerman's Firm Owns (MO), (SKS), (WMT), (YHOO); Finerman's Firm Is Short (IYR), (IWM), (SPY), (IJR), (MDY); Finerman's Firm And Finerman Own (CROX); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (RIO) Puts; Najarian Owns (BIIB), (C), (CSCO), (MS), (MSFT); Najarian Owns (WM) Calls, (YHOO) Calls, (AAPL) Calls, (NSC) Calls; Natixis Bleichroeder Inc. And/Or Affiliates Managed Or Co-Managed A Public Offering Of Securities For Citigroup Within Last 12 Mos.