06/04/2012: Guess on Market for the rest of 2012
The bulltrend that currently ended in early May was involved with big stocks only. That's unusual, especially the trending was steady.
Before the strong bull trap of from Apr 25th to May 3rd, which trespassed 50SMA on both ends and hence indicated a big down, it had a small strong bear trap formed by gapped down shape of Apr 23rd and 24th, which tested the major support of the then uptrending. The shape of such pattern on TA means the downtrend will be deep and steady.
In 2004, the last electoral year that involves the second term of an on-power president, NDX was straight down till the week of August 9th:
Aug 23, 2004 1,388.56
Aug 16, 2004 1,366.73
Aug 09, 2004 1,307.82
Aug 02, 2004 1,315.30
Jul 26, 2004 1,400.39
Jul 19, 2004 1,375.48
Jul 12, 2004 1,392.17
The reversal point was the week of Aug 16th which surged up with weekly big gain overcoming the last big drop of the previous two weeks.
And the market went steady up since then.
In electoral years, the stock market is about the battlefield of two presidential candidates, especially in the year involved with the second term of an on-power president.
From middle August 2004 to the year end, top NDX components were interesting:
MSFT didn't go up much: 27 to 30 and then gapped down in late Nov and ended at 27.
INTC didn't go up much: from 26 down to 20 and ended at 23
CSCO straight down from 22 to 18 and ended at 20
ORCL reversed, up from 10 to 14
EBAY continued uptrending from 37 to 57
DELL consolidated between 34-36, broke out in late Oct and surged up to 42
AMGN simliar to DELL, broke out in late Oct and surged from 53 to 65
AAPL doubled from 15 to 30
AMZN was flat to down between 50 and 35 with ending at 40
QCOM continued uptrending from 35 to 45
YHOO continued uptrending from 26 to 38
RIMM continued uptrending from 55 to 90 (After Jun 7th 04 2:1 split and before August 21 3:1 split )
CMCSA reversed from 18 to 22
(GOOG was not in index at that time)
The leaders that contributed were ORCL/EBAY/AAPL/QCOM/YHOO/RIMM, and substantial contributors starting late Oct were DELL/AMGN.
MSFT/INTC/CSCO were draggers.
The reason to examine is that financial powers of the two parties may control different sectors or stocks.
I personally cater to guess that the market will reach the real bottom in the end of July or early August, and go up from there. And it will make new high of the year in early Nov to benefit the on-power president when voting is about to kick off as it did in 2004. At that time, some stocks will surge up for no reason to push index just as DELL/AMGN did 8 years ago.
Some further guesses:
1, MSFT/INTC may not have good uptrending in the rest of year like in 2004
2, Given the current relative strength, CMCSA/AMGN/EBAY may break out to make new year high after August till year end
3, All gapped down laggers such as ORCL/CSCO/HPQ shall have a good uptrending starting from middle August
4, Other things are subject to further review, especially, AAPL is dominant in the current market
Guesses integrated with the current ongoing market:
1, It will go down to find the first bottom before/at FOMC Jun 19-20, together with the uncertainty of Junn 17th Greek vote
2, It will then rebound and break down to find new low before/at FOMC July 31/August 1
3, It will go straight up from August 2nd till year end amid making new year high around early Nov when presidential voting starts
I read with interest of your post. One note on CMCSA, its movement has been interesting for the past years. Would you mind share your reading of its chart and outlook of the possible movement it will make in the second half of 2012?