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One Thing to Watch Today

Published on December 31, 2008

One Thing to Watch Today

December 31, 2008

Last Trading day of year 2008! Let’s see what does markets bring today. There was a spending cut by Santa as well (except yesterday) else during this period that is typically termed as “Santa Rally” going into initial few days of Christmas won’t be so dull. The rally was good from % standpoint but the volume was lacking. The 30 year treasuries bond’s yield declined even further creating further doubts if the money is really flowing into stock market behind these rallies or just the dead cat bounces.

For the past 8 years, Gold has been on a rising trend and closed higher on the last day of December than the prior year’s close. 2007 closed at $838. Gold must close above $838 to continue the bullish series. So the one things I’ll be watching today is that can Gold do it, can it close above $838? As of this writing Kitco Gold spot price is at $865 and it seems likely that Gold can maintain it bullish momentum. This might be of utmost importance to the gold bullies, including me who has long term bullish bias on Gold.

Coming back to markets, all major markets rallied yesterday> 2%. But guess what? where is the volume? and if this was a sign of return money flow to markets, why then Bond prices continue to soar and hence yield declining to almost lowest level in 30 years. But whatever the reason maybe, The bottom line is market did rally coming out of the lackluster, which has dominated since the Dec. 22 decline. That being said, should the market continue its advance on the last day of 2008, the nearest important resistance for the major market indexes appears to be at the Dec. 8/16 recovery highs. Specifically, this potential resistance is near 8950/9020 for the DJIA, 915/920 for the S&P 500 and 1600/1605 for the NASDAQ.

This is typically a bullish period for markets, termed generally as “Santa Rally” resulting into few more bullish days into Jan. It remains to be seen if sufficient demand will return to market making these advances more convincing.

Profitable Trading, OP

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