Is This A Dead Cat Bounce?

Hello traders everywhere! Adam Hewison here, President of and co-creator of MarketClub, with your video update for Friday, the 7th of February.

After getting pummeled the past several weeks, the markets recovered some this week and appear as though the indices are going to close out either flat or with modest gains. Many popular stocks are showing gains on average of about 3%, not a bad move given how much they were pushed down.

Gold and crude oil also moved in the same direction, each gaining on average a little less than 1% for the week. The mighty Dollar on the other hand did not fare so well this past week, losing close to 1% in heavy interbank trading.

Is this a dead cat bounce or is this a meaningful turn in the market? Also on traders' minds is the fact that gold continues to meander sideways and really hasn't moved as many traders expected. I believe that patience is the key to this market.

Of course, there are still problems in Washington, the non-farm payrolls came out today and painted a dismal picture. Treasury Secretary, Jack Lew, is telling us that the government will run out of "extraordinary measures" to keep afloat by the end of February if Congress does not act to raise the debt limit. It sounds like we have heard this all before, doesn't it?

Stock Changes For The Week

Yahoo! Inc. (NASDAQ:YHOO) + 2.00%
Starbucks Corp. (NASDAQ:SBUX) + 2.78%
The Walt Disney Company (NYSE:DIS) + 3.59%
Apple Inc. ((NASDAQ:AAPL) + 3.74%
Netflix Inc. (NASDAQ:NFLX) + 3.34%

Every success with MarketClub,
Adam Hewison
Co-Creator, MarketClub

Bloomberg BNN CNBC FOX

Adam appears frequently on the following financial news channels as a guest expert. Click on any cable logo to watch Adam's latest appearance.

9 thoughts on “Is This A Dead Cat Bounce?

  1. Considering Technical views for Dow, it is observed that any further Bull run continuation is quite difficult, because breaking of 15540 level is not a good sign, which taken place in earlier days, so now, if market again break near supports of 15,390 and 15,145 respectively, downtrend will confirm more precisely, and therefor, above levels should must be maintain for sustaining current bull run.
    Current recovery seems pure technical without any firm long or even medium term bull run, so if market move downward again, final supports are at 14660 and 14480 and bellow that crucial levels, there will be a serious negative bias, and also can be deemed as the end of Bull Run, unless finding further upward level gain as described above.

  2. Depending on the index the charts are shaping to look like the years 2000 or 2007. This could likely be the year the broad market tops-out! Keep in mind that the years 2000 and 2007 are 7 years apart from top to top. The years 2007 and 2014 will make 7 years apart too. We are approaching the 5th anniversary of the March 9th bottom and going into the 6th year. How long can this bear market rally continue? As goes January, so goes the rest of the year! Well...January finished in the red, so 2014 could finish in the red. However, in between now and the end of the year...sometime in the summer or fall...most likely Q3...what's to say the DOW surges all the way towards 18,000, Nasdaq aims for 5,000, and S&P lands somewhere in the 2,000 range??? For the market to end at the highs of the year on the very last day of 2013 is very rare. There's no way that will happen again in 2014. Expect the highs to occur during the year (intra-year) this year.

    1. Actually, I agree with what you say. I don't think the current sell off has hit its low, but after today I am feeling wrong, at least for now. However, I am still believing in a low at around 1622 in the next 30-60 days followed by a high at 1915-60, or higher, basis the SP 500, in August-Sept. We'll see.

      1. I think the bottom is in for this latest correction. After the huge bounce in the past couple of days we are now hitting the resistance 50-day moving averages. Expect some bouncing around/sideways trade for several weeks before the push higher. I don't see 1622, but I do see 1760, 1770 area being tested, especially with the latest news from the Treasury of the Debt Ceiling going into emergency funds mode. We'll have to wait it out until the last week of Feb. I think S&P 2000 is in the cards by Q3. The market could be up as much as 10 to 15% this year before all the gains are wiped away in Q4 on the results of the Mid-term elections, Obamacare Employer Mandate (loss of more jobs), rapid rise in interest rates, and the Fed finishing the tapering and possibly raising rates.

    1. Offensive? Are you a cat? How do you know any cat is offended by that expression? Stop taking things so seriously.

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