Today we got the rebound rally that we thought might come yesterday, however, all in all it was pretty weak, with all of the averages actually ending lower than than the early open strength they showed in the first 30 minutes.

 All ran up against ST trend resistance and backed off by the close, and while all were up slightly on increased volume, it was still below or just average volume.

As we mentioned a few days ago, it is beginning to look like range trading for the remainder of the year.  Technicians have noted we may be looking at what is known as a “flag” pattern developing.  This action is basically when the average’s “range” begins to contract (in a sideways triangle shape) into a smaller and smaller range over a period of time before breaking hard in one direction or another.  It wouldn’t surprise us if this “flag” pattern continued (with a shrinking range) through the year’s end.

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Bad news continues as GS reported “apparently” great numbers only to be met with skepticism because, (November was “horrible”) a large potion of their earnings were related to one-time gains, resulting in very heavy selling the first half of the day, and though the stock was able to recover some of the day’s losses, still closed off 3.5% on >2x average volume, and just below its most recent low on 11/8 of 201.57…

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More bad news today included…

- Mutual Fund “outflows” highest since 2002…

- Housing construction levels lowest since 1991…

- Darden restaurants lowers guidance, citing consumer weakness…  Or our take, folks are eating out less…

- According to LEH, REIT returns will be negative for 2007 vs the the S&P, and likely worsen in 2008…

- Merrill-Lynch may announce more BIG writedowns, aka “LOSSES”… 

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Time to enjoy the holidays, your families, work on your watchlists, and wait for bargains to emerge in the new year.

HO HO HO

Coach BD  

12/18/2007 at 11:02 pm
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