Saturday, March 8, 2008

Charts to Watch

A few sector charts to start off that I found interesting. Is energy about to break down? I've read a lot of material stating that the rise in oil is not supply/demand based, but more speculation. There is also the issue of the weak dollar causing the rise in prices, and it doesn't look like the dollar will be strengthening any time soon, not with the Fed about to lower rates another 75 basis points. So this could be just a brief pullback, but the charts are showing it could be something more than that. If the market continues to head lower, it will likely get all stocks to join the party at some point, even the oil stocks. Financials are obviously weak but a short-covering bounce could happen at any time due to news or new rumors. I would wait to initiate any shorts here.

XLFXLE
OIH
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

After Friday's weakness, it is harder to find lower-risk shorts right now. If you are entering here, you still may be OK, but just accept the possibility of having some quick losses, as a bounce could happen early next week. I have a little cushion in most of my shorts right now, so I am hoping I can withstand any bounce that occurs, because the trend definitely is lower.

MON
AA
DE
MORN
EDU
NTE
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

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