Archive for January, 2010
The Market Should Have Rocketed On The News - It Did Not. Selling Pressure Is Strong!
Yesterday, the market continued to slide. Overseas markets were weak and cyclical stocks gave cautious outlooks after releasing earnings. Initial jobless claims disappointed for the third straight week and investors hit the exits. Before the open, the first estimate for Q4 GDP was released. Analysts were looking for 4.6% and the US economy grew by 5.7%. The S&P 500 instantly shot eight points higher on the news. Businesses are building inventories and they are starting to spend a little more (business spending up 2.9%). This was the strongest growth we’ve seen in more than six years. After the open, Chicago PMI …
The Market Is Testing Major Support At SPY 108 - If We Close Below It - GET SHORT!
This week, the market has continued to struggle. It has broken the uptrend line from March and it has broken horizontal support. If it breaks below SPY 108, we will see another leg down. Only a few weeks ago, we saw excessive optimism and that bullishness needed to be flushed out of the market. Almost every analyst on CNBC was bullish, 80% of all newsletter writers were bullish, option implied volatilities were near 18-month lows indicating a high level of confidence and call option volume was extremely high the week before expiration. When sentiment reaches these heights, sharp declines occur. Bullish …
No Matter What We Hear Tonight - The State Of The Union Is Weak!
The market has not been able to snap back after last week’s decline. In prior months, material declines represented buying opportunities and bulls quickly stepped in. This reluctance tells me that the market is tired and sellers are eager to take profits. This morning, overseas markets were weak for the third day in a row. Yesterday, Japan’s credit rating was lowered by S&P 500 and that is having a lingering effect. Last week, China demanded that its banks hold off on new loans until February. It is trying to head off an overheated economy. I believe they will be sitting on …
Day Trade This Bounce and Get Ready For Another Round Of Selling Next Week!
Traders have digested last week’s news and some of the nervousness has come out of the market the last two days. The market was able to find support yesterday and after testing the downside this morning, prices have rebounded. Traders are still worried that Congress wants to get actively involved in the Fed’s decisions. Ben Bernanke is likely to be reappointed, but no one thought it would be this much of a struggle. The FOMC meets tomorrow and it should be a non-event. They will keep rates low and describe improving conditions and a fragile recovery. Overseas markets were weak when …
Should I Hold or Sell?
How do I know when to hold and when to sell?