Friday, January 16, 2009

State of the Market - 1/16/09

After putting in a bullish reversal yesterday, it looked early on that stocks would build on that move as futures were up pre-market due to another tax-payer sponsored bailout for BAC. Stocks did gap up but really didn't move any higher and slid much lower in a choppy fashion throughout the morning hours, reaching lows around lunchtime. The Nasdaq moved 50 points off its highs and the S&P moved 30 points off its highs, so this looked very bearish at the time. However, stocks put in a bottom there and moved higher throughout the rest of the session in a choppy fashion, closing slightly below their morning highs. Volume looks to be close to yesterday on the S&P but lower on the Nasdaq.

Technically, the Nasdaq bounced right up to its 50 day moving average today so it is getting close to the levels I would look to get short at again. I think it could move as high as the 1550 level though so the timing of this will continue to be tricky. The S&P still has a ways to go to get up to that 870-880 area that I would look to get short at again. Financials were particularly ugly today on a relative basis so that is something to watch - XLF is still quite oversold so I am going to have to wait for a bounce to get short here - I don't want to chase to the downside.

In my earlier post, I said that I doubted I would trade today and that held true - I did nothing. I am glad I did, because today is the type of day that will make you go crazy. With the opening gap, it certainly looked like the market was going to build on the reversal from yesterday. So what does it do? Just fall 30 and 50 points on the S&P and Nasdaq respectively in about two hours. That is about as bearish a scenario that you can find after being so oversold going into yesterday. I am guessing a lot of people went short at that point, so what happenened? The market rallies right back up and takes back most of what it lost. Too much whipsawing going on right now for my tastes - I will wait for the inauguration to pass before getting heavily invested on either side of this market.

As I said earlier, I will try to get a video done this weekend and since it is a long weekend, I should be able to do so. Right now, my outlook hasn't changed - I think we can get another day or two of higher prices, but I expect this quick bounce to fail as we approach resistance. The variable is the whole inauguration thing and how the market reacts - will it be a "sell the news" event? I think it could be so I am really only looking to the short side of the market right now. After doing my scans, I'll be able to see if any bear flags are setting up on individual stocks that can be shorted next week. If I find some, I'll send them along in the video. Take care and have a great weekend!


Charlie G. said...

Glad I wasn't the only one - I couldn't get a handle of where things were going. The afternoon was so choppy if was easy to get stopped out. Steelers-Ravens should be a street fight!

szaman said...

I took 16 trades today,came home with -$9.18 and a headache.Why do I even bother in a day like today.

Mac said...

It definitely looked choppy. I hope one thing I am learning or have learned is when to stay out of the market and not try to force things - wait for the really good opportunities to come up instead of just trying to force any. Days like today are the ones to stay away from.

As a Steelers fan, I am a little worried as EVERYONE is picking the Steelers. The Ravens are beat up but they can still bring it. I think whoever wins the turnover battle will win, and hopefully that's the Steelers.

Bad Credit - Easy said...

Sometimes stupid market fluctuations like these are just indicators for us traders to be more careful. I too lost some money that day.