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Nasdaq Rising Wedge
By Arthur Eckart
The bulk of third quarter earnings were reported over the past two weeks. Many stocks, particularly tech stocks, fell sharply on above average earnings and guidance. Consequently, the stock market was more predictable than many individual stocks. SPX, for example, generally traded within 1,170 and 1,200, i.e. multi-year support at 1,165 and the 200 day MA at 1,200. Also, the economic data reported Friday showed real GDP expanded at a 3.8% annual rate during the third quarter. So, there was no "soft-patch" afterall.
However, the market continues to worry about inflation. The GDP Chain Price Deflator, also reported Friday, rose at a 3.1% annual rate during the third quarter, which was much higher than the 2.6% rate reported for the second quarter. Recently, the market has been fearful that the FOMC will continue to tighten the money supply well into next year. On Tuesday, the FOMC is expected to raise the Fed Funds Rate another 25 basis points to 4%. That would add up to 300 basis points of hikes (25 basis points at each meeting) over the past 16 months.
Nasdaq Rising Wedge Continued
NASDAQ Stock Orders
By Larry Potter
Stocks that are not listed on a traditional exchange but trade via the NASDAQ system are handled with a very different mechanism. There is no centralized exchange, but there is a system of competing market makers who post quotes on NASDAQ stocks. The spreads between the bid and ask prices tend to be much larger for NASDAQ stocks than for comparable exchange-listed stocks, and the number of shares that the dealers quote are usually not representative of their willingness to trade. As with exchange-listed stocks, your broker can tell you what the best quotes are at any moment.
If you place a market order, you will probably get the order filled at the current bid or ask quote. Limit orders on NASDAQ are handled very differently from limit orders on the NYSE or Amex. Most likely, your limit order will stay with your brokerage firm and only be executed if the market makers’ quotes change to meet your order.
NASDAQ Stock Orders Continued
SPX & Nasdaq Rising Wedges
By Arthur Eckart
The stock market had one of its biggest weekly advances in years last week with SPX rising over 37 points and Nasdaq rising over 100 points. The FOMC Minutes, released last week, gave only a scant indication that the monetary tightening cycle will end soon. However, that was enough to spark a rally and generate waves of panic short-covering, which drove the market even higher, after the heavy short-selling the previous week.
Monetary policy has been stimulative for about five years, since the Nasdaq bubble burst in 2000, the recession of 2001, and 9/11. The FOMC has been removing its policy of accommodation over the past 18 months, and may be near a neutral stance, where monetary policy neither stimulates nor slows the economy. However, I suspect, more tightening is needed to slow the economy and maintain price stability, although the FOMC may pause in 2006.
SPX & Nasdaq Rising Wedges Continued
NASDAQ Stock Orders
By Larry Potter
Stocks that are not listed on a traditional exchange but trade via the NASDAQ system are handled with a very different mechanism. There is no centralized exchange, but there is a system of competing market makers who post quotes on NASDAQ stocks. The spreads between the bid and ask prices tend to be much larger for NASDAQ stocks than for comparable exchange-listed stocks, and the number of shares that the dealers quote are usually not representative of their willingness to trade. As with exchange-listed stocks, your broker can tell you what the best quotes are at any moment.
If you place a market order, you will probably get the order filled at the current bid or ask quote. Limit orders on NASDAQ are handled very differently from limit orders on the NYSE or Amex. Most likely, your limit order will stay with your brokerage firm and only be executed if the market makers’ quotes change to meet your order. For example, suppose that you are interested in purchasing a NASDAQ-traded stock whose best displayed quotes are a bid of $8 and an offer of $8.75. If you place a limit buy order at $8.25, your order probably will not be filled until one of the market makers decreases their ask quote from $8.75 to $8.25.
NASDAQ Stock Orders Continued
Speculator or Investor?
By Al Thomas
Talked to your broker or financial planner lately? Probably. The slowdown in the economy is causing the stock market to go down. Of more than 5,000 stocks on the Nasdaq over 1,000 have lost 90% of their value and more than 200 have lost 99%. The Index is off 58% from its highs. Pretty scary for ‘Buy and Hold’ believers.
When you ask your broker what to do he usually gives you the standard Wall Street conventional wisdom, “You are a long term investor. You are in for the long haul. The market always comes back”. Now ask yourself, “In my lifetime?” Having traded for more than 30 years I will tell you any stock that has dropped 90% will never go back to its old highs and the Nasdaq Index will go lower before it goes higher. The most optimistic opinion I have is it will be 10 years before we see any kind of approach to 5100.
Speculator or Investor Continued
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