Thursday, August 21, 2008

State of the Market - 8/21/08

I was away from my desk for most of the day today once again, so this commentary will be brief until I go through my scans, but my first impressions are that today was another day where I could have easily lost some money if I was trading. The market started lower today as the story was oil - a big spike in crude seemed to spook stocks early in the session. However, I have to admit I am impressed that the market made its lows right away and was able to move higher for most of the rest of the session, even with crude holding most of its big gains throughout the session. Stocks finished mixed, with the Dow and S&P up slightly and the Nasdaq down slightly.

Technically, the Nasdaq continued to hold its 20 day moving average today, but the Dow and S&P are right below their 50 day moving averages, so that will be a hard area to overcome. The XLF held support once again today around $19.75 and until we get a true break below this, I would wait a bit to get short in the financials. The USO is right at some overhead resistance, so I wouldn't be surprised crude pulls back a bit soon.

The real story from what I can see, besides the spike in crude, is the volume, or should I say, the extreme lack of volume. I believe that it might come in as the lowest total since July 3, which may have been a half day anyway (I can't remember). When you have such extremely low volume, you will see days like we have seen this past week - up, down, up, and down intraday - and it is hard to put much stock into anything that happens. That's why I have sat out the past two days and will likely do the same tomorrow. There is no point risking capital in a market where really not much is happening. When the big boys come back to play, and volume picks back up, I will be ready to act, but until then, it seems prudent to wait or at least be careful.

I will be back later with some charts, but my early scans show very few great short opportunities. Actually, this commodity bounce may present some very nice opportunities if they continue to bounce for a few more days. There continue to be a few longs that look decent, but without higher volume, they are susceptible to false breakouts. If there were more nice setups presenting themselves on either side of the market, I might be more interested in doing things here, but that fact along with the low volume tells me to take it easy here - still.

I'll be back later with some charts or a short video. Take care.

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