Thursday, October 30, 2008

State of the Market - 10/30/08

After falling over 400 points in 15 minutes to end yesterday's trading in the red, stocks did the logical thing today - move higher. Welcome to the stock market. Futures were up big pre-market due to overseas markets rallying on the news of the Fed rate cut. GDP numbers did not hurt the futures, and stocks did open higher and moved up furiously for the first fifteen minutes of the session. They attempted to consolidate for about an half hour, but could not there and fell lower, making a low right before the lunch hour began. From there, it was a steady climb higher, with stocks coming close to challenging their morning highs around 3, but could not breakout and fell a bit into the close, although the last ten minutes was a complete reversal of yesterday's close, with a quick pop that brought stocks back up near their highs for the day. Volume however appears to be lower.

Technically, it looks like stocks may be trying to consolidate here between their 9 and 20 day moving averages. I actually hope that is true, because some rest and sideways action would be the best thing that could happen to this market if you are hoping for a nice, tradeable bounce developing into the end of the year. I am in that camp and would love to see another day of consolidation tomorrow. Individual charts are still ugly for the most part and rest on the indices could allow some of these charts to get back into buying shape. Let's hope that happens.

I made no moves today and I have explained why over the past few days. I am ready to act if the market tells me it is ready to reward me for acting. So far, it is not doing so. What it is telling me is that it still really enjoys jerking people around, both shorts and longs. Why do anything when the market is acting like that? Perhaps though the market is getting tired of doing that.

All in all, I have no problem with today's action. I think it is constructive. If we see some more consolidation over the next few days and then we can break above yesterday's highs, then I would look to try some longs out. I would love to see a lighter-volume pullback tomorrow actually. That's what I am looking and hoping for - we'll see if we get it. 970 is a big number on the S&P 500, as is 1705 on the Nasdaq. Remember tomorrow is quarter-end for mutual and hedge funds, so don't be surprised if we see some games being played. If I see any charts starting to set up after going through my scans, I will be back later. Good luck.


Gio said...

if i expect the unexpected, and it comes just as expected, is that really the unexpected? (gio scratches head)

Gio said...

What do I got? what do you want? ... "'what do i got'" is zen-like ... i have many things... but what i got is not what i have. i don't have what i got. ... i don't have what i got, i don't have what i got, i don't have what i got."

- Charlie Gasparino (CNBC)
link to video

(Gio scratches head some more)

Anonymous said...


I think this market is ready to start her bear market rally.