Chartology - Charting Amid The Storm
After a record week for volatility what lies ahead? Find out from Oppenheimer Chief Market Technician Carter Worth.
Background: On October 1st Carter Worth began publishing bearish reports. On November 8th, he came on Fast Money and stated his belief that we were in a bear market. Since that time the Dow is down 10%. On Tuesday, he called for the market rebound.
Following is a summary of the main points made by Carter Worth on Fast Money.
What do the charts suggest?
We are probably in a bear market rally, says Worth. However, the issue now is how much the market will rally before ultimately turning lower and touching 1200, which I think is the S&P's final destination. I estimate that 1380 could be the high for this bear rally, he says, but ultimately the market should head lower.
Is anything working?
What is working in this market is gold, he adds. But gold itself has far outperformed gold stocks. Historically, the performance of gold stocks and the underlying commodity have been more closely correlated. This diversion between gold stocks and gold has probably created a buying opportunity.
What’s the trade?
Buy gold stocks, counsels Carter Worth.
Buy the dips and sell the rips, adds Pete Najarian. Investors probably need to take profits when they see a quick and violent move.
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Trader disclosure: On Jan 25, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (C), (CSCO), (MCD), (MS), (MSFT)’ Najarian Owns (AAPL) Calls, (COP) Calls, (DOW) Calls, (WM) Calls, (AAPL) Calls, (DPTR) Calls, (YRCW) Calls; Seymour Owns (AAPL), (CSCO), (INTC), (MSFT), (TSO), (SSL), (SBUX), (YHOO); Seygem Asset Management Owns (COP); Finerman's Firm And Finerman Own (HD); Finerman Owns (GS), (M), (WMT), (MO), (GLNG), Finerman's Firm Owns (SUN), (TSO), (VLO), (YHOO), Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns Paramount Energy Trust