As everyone knows back in late February all of the major averages took a nosedive breaking their 50 and 20 smas. Then a couple of panic drops, even though they didn't feel too panicy, brought us to a near term low. Since then we've been in an upswing with all of the averages putting in a good move last week. This move has been a strange one however and it seems many technical guys out there, myself included, are wondering how we could get such a sharp climb back to where we violently broke the 50 sma. Regardless of what TA rules it broke and which it didn't, the averages made the move and now aren't very far from where they were before this whole incident.
So, where do we go from here?
Well, the Dow has yet to break back above it's 50 sma, signaling weakness. However both the Nasdaq and S&P remain above their 50's although just barely. The 50's themselves are beginning to slope downward, providing less and less support for these averages to rest on.
This situation is a bit peculiar. On one hand, you have the strong move the markets made last week and the fact that market has seemed to regain footing a bit more so than expected. On the other hand, you have weak intraday action and fading support. Things seem to be a coin flip right about now. However, i would err on the side of caution and the fact that the market is overbought currently and stay out, until a clear signal emerges.
Tuesday, March 27, 2007
Monday, March 19, 2007
No Real Progress Made...Yet
Dow was up 115 today and the S&P was up 15. After a couple of up days, it seems everyone is all smiles, recommending buy after buy and looking to throw the money into the market. The price action is concerning however. Didn't we have a few up days not too long ago and then get hammered (big fall on Tuesday and Wednesday of last week)?
Well it looks like we might be in danger of that happening once again this week. First let me get this straight. I'm not saying we're doomed for a huge fall right here, right now. On the contrary, tomorrow will probably carry on today's rally. Based on the fact that the Asian markets are looking strong at the moment, we'll probably see a positive reaction tomorrow.
Soon, however, there will be resistance. The Dow and S&P have their middle bollinger band (right around where the first bounce peaked) to contend with very soon if not tomorrow. That could put a halt to the run. Also, the downward sloping 50 sma will provide significant resistance for the indices. It will be a battle to retake them if the indices keep moving upward.
The bottom line is that it just doesn't seem like the time to fall in love with the market. There is a lot ahead for the major indices to do before we get on track for further upside. I'd approach this market with great caution.
Keep watching the price action especially as we get to around 1409-1410. If the market can't break through this, then we could see some nasty blows in the near future.
I'll be back tomorrow.
Well it looks like we might be in danger of that happening once again this week. First let me get this straight. I'm not saying we're doomed for a huge fall right here, right now. On the contrary, tomorrow will probably carry on today's rally. Based on the fact that the Asian markets are looking strong at the moment, we'll probably see a positive reaction tomorrow.
Soon, however, there will be resistance. The Dow and S&P have their middle bollinger band (right around where the first bounce peaked) to contend with very soon if not tomorrow. That could put a halt to the run. Also, the downward sloping 50 sma will provide significant resistance for the indices. It will be a battle to retake them if the indices keep moving upward.
The bottom line is that it just doesn't seem like the time to fall in love with the market. There is a lot ahead for the major indices to do before we get on track for further upside. I'd approach this market with great caution.
Keep watching the price action especially as we get to around 1409-1410. If the market can't break through this, then we could see some nasty blows in the near future.
I'll be back tomorrow.
Tuesday, March 13, 2007
No Suprises
It wasn't much of a suprise that today's drop happened. The bounce that was supposed to take us up to new highs according to so many just did not happen. There's no way it should've. You can't go from pure unabashed complacency to panic to unabashed complacency that quickly!
There's obviously more room on the downside from here. I wouldn't be suprised if the weakness eventually carries us through the 200 sma of the major averages.
Tommorrow will be no exception. Expect further weakness and some follow through to today's action. If Asia and Europe are weak as well, it could get nasty.
That's it for tonight, i'll be back tomorrow.
There's obviously more room on the downside from here. I wouldn't be suprised if the weakness eventually carries us through the 200 sma of the major averages.
Tommorrow will be no exception. Expect further weakness and some follow through to today's action. If Asia and Europe are weak as well, it could get nasty.
That's it for tonight, i'll be back tomorrow.
Wednesday, March 7, 2007
Mint Money on Halliburton Bid-Ask
Today, around 1:10 pm there was a huge reversal of roles in the bid and ask functions for Halliburton which opens up the oppurtunity for arbitrage. Basically, you could buy shares of Halliburton at 31.49 and sell them at 31.65, a 16-cent profit for each share. I've been suprised lately how this type action has taken place in stocks since the drop.
Right now the market's just kind of neutral. The indices are mixed, nothing strong one way or the other. For right now i'd hold off putting any money in unless an extreme move to the upside or downside happens.
Right now the market's just kind of neutral. The indices are mixed, nothing strong one way or the other. For right now i'd hold off putting any money in unless an extreme move to the upside or downside happens.
Monday, March 5, 2007
Ugly End to the Day
What an ugly way to end the day. The Nasdaq at one point was up to 2378 but ended at 2340. I continue to think the short side will be much more profitable here than the long side unless you are strictly trading intraday with tight stops. There has yet to be anything that proves that we are at a bottom and the only thing that looks like it will stop this fall is the 200 sma.
People continue to pound the tables saying that the selling is overdone and that we should be rallying. However, if you put things in perspective, this rally is just a blip (maybe slightly more) compared to rally in the fall. There is much more downside work to do.
My point is trends often go on longer than you expect them to. Right now the 50 sma of the Dow is turning downward, price has been weak day after day with people looking for any rise to get out on, and we have not found support yet. You can't call a bottom right here.
Until we do find support and there is evidence in the price action to show that things are turning themselves around (easier to make money buying than selling), I will continue to say hold off on buying.
People continue to pound the tables saying that the selling is overdone and that we should be rallying. However, if you put things in perspective, this rally is just a blip (maybe slightly more) compared to rally in the fall. There is much more downside work to do.
My point is trends often go on longer than you expect them to. Right now the 50 sma of the Dow is turning downward, price has been weak day after day with people looking for any rise to get out on, and we have not found support yet. You can't call a bottom right here.
Until we do find support and there is evidence in the price action to show that things are turning themselves around (easier to make money buying than selling), I will continue to say hold off on buying.
Sunday, March 4, 2007
Guru's Call Bottom Way Too Soon
I've been really suprised that so many people are ready to start flinging money into this market for anything more than a quick flip. Jim Cramer has been telling people to bid since the first drop. He has continued to push stocks since then.
I've read other "guru's" who have been saying this is just a blip and should be bought right here.
My response: WRONG
Yes, the market is getting oversold in the short term. One would expect that after such a big move. But one week is not going to solve the markets problems. There has been a lot of damage done and technical indicators right now are pretty ugly. A break of the 50 sma, shorter term moving average crossovers and just plain weak action (the close on Friday for example) all are not a signal to buy right here unless it is an intraday or short play.
By looking at the Dow chart you can see that the average is topping out each day on it's 3 day ema. MACD and stochastics do not look good at all. Selling volume has been heavy.
My point is that building a bottom isn't happening right now. It took a while to happen last May and it will continue to take a while this time around. So don't be too eager to put down the cash right here right now and buy. Wait for some confirmation and right now it just hasn't happened yet.
The Nikkei is down 375 points currently at 12 pm Japanese time. Other Asian markets are down as well which does not bode well for the US markets tomorrow. Noting this and the ugly close on Friday I do not expect much on Monday. However, volatility does go both ways which can make intraday action interesting.
I'll pretty busy right now but hopefully I'll be back posting again tomorrow.
I've read other "guru's" who have been saying this is just a blip and should be bought right here.
My response: WRONG
Yes, the market is getting oversold in the short term. One would expect that after such a big move. But one week is not going to solve the markets problems. There has been a lot of damage done and technical indicators right now are pretty ugly. A break of the 50 sma, shorter term moving average crossovers and just plain weak action (the close on Friday for example) all are not a signal to buy right here unless it is an intraday or short play.
By looking at the Dow chart you can see that the average is topping out each day on it's 3 day ema. MACD and stochastics do not look good at all. Selling volume has been heavy.
My point is that building a bottom isn't happening right now. It took a while to happen last May and it will continue to take a while this time around. So don't be too eager to put down the cash right here right now and buy. Wait for some confirmation and right now it just hasn't happened yet.
The Nikkei is down 375 points currently at 12 pm Japanese time. Other Asian markets are down as well which does not bode well for the US markets tomorrow. Noting this and the ugly close on Friday I do not expect much on Monday. However, volatility does go both ways which can make intraday action interesting.
I'll pretty busy right now but hopefully I'll be back posting again tomorrow.
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