Friday, March 28, 2008

State of the Market - 3/28/08

I really don’t have much to comment on today’s market, other than to say it was one of the most boring days I can remember in a long time. The markets meandered their way lower throughout the session and finished right near their lows, which is not good. Volume was very low - I had my quote screen up in the afternoon and it honestly looked like it was broken and not working. It is hard to take too much out of trading this slow, but bulls don't seem too interested in putting up a stand here. The selling hasn't been very intense the past three days, but there has been selling nonetheless, and the charts of the indexes now look quite poor. As I said yesterday, the bulls needed to put up a stand today and they didn't - there just doesn't seem to be much interest in buying stocks right now. I don't know what IBD will say about this current rally, but bulls are on their last legs here and need to do something early next week to keep this going. They have done a very poor job so far and because of that, I have to continue to lean bearish.

I started positions in two other shorts today, although with the indexes down three straight days, I am not being very agressive here. It may be a little late here to get heavily short. Once again, it looks like the reversal on the Market Monitor on Wednesday was the signal to go short, or at least start positions. This will be the third time in a row that a reversal in this signal has signified the peak of a bear market bounce, unless the bulls get their act together quickly next week. I need to trust it more. That being said, I saw a lot of shorts setting up mid-week, but few have broken down in a way that I like and with the volume I like to see. If you look at CPLA, the huge volume on the breakdown today was what you want to see as a signal to get into shorts. I did not enter this today, because I felt it was a little too late, but that big-volume downmove usually leads to much more downside action. Most shorts I saw setting up have just drifted lower on lower volume, much like the indexes, which makes entry more difficult.

Cash and patience remain very good options right here because the market just isn't presenting too many nice opportunities. I am still hopeful the bulls will come back and keep this rally alive, but based on the action since the follow-through, I just don't see that happening right now. We shall see next week. I will try to post some charts this weekend. Good luck.


Woodshedder said...

Greetings Mac- this market monitor you speak of, would it be Pradeep's?

If so, I've not followed it since he went for $$$.

I liked it a lot when it was free. I think Danny from iBC may still subscribe.

Mac said...

Yes, my Telechart scans are pretty much the same ones Pradeep runs - I don't know if they are exactly the same because I didn't sign up for the paysite either, but following his blog for so long, I learned the basic ideas he used, so I think it is pretty close. It is another nice signal to have in the trading arsenal.