Monday, January 26, 2009

State of the Market - 1/26/09

This commentary is going to be a little shorter today because I really don't have a lot to say. We had another very choppy, directionless session where we started higher in the morning, ran into some overhead resistance, sold all the way off, but bounced into the close preventing a breakdown. Everything I said last night in the video still is true - we are in a small consolidation here and until we break out of it one way or the other, it is going to be hard to make a lot of money. Volume continues to soften as this consolidation progresses. Watch the 50 day moving average around 870 as upside resistance and 800 as downside support on the S&P. A break of one of those levels and we probably have ourselves a tradeable move to trade, perhaps a meaningful one.

I made a small trade today in TC at $4.73 this morning but was stopped out later at $4.61 for a 2.8% loss. It looked good at the time and I was basing it more on the individual chart rather than the overall market, although at that point, the market looked good too. No need to overstay your welcome though right now in my opinion - if positions don't work right away, get rid of them. I would have been better off just not even watching this market however.

I said last night that I was leaning bearish due to the individual stock setups I see and I still hold that belief after today. I mean, look at JPM, GS, and PNC. Can someone please explain to me how these setups are bullish? V-shaped dead-cat bounces with receding volume as they get closer to their short-term moving averages? That's about as bearish as you can get. I am still looking to get short these names when the time presents itself - it's just a matter of figuring out what time that will be.

Oscillators and indicators are still pretty neutral so I don't see an edge from that aspect yet. However, if we chop our way a little higher over the next few days (sort of like we did today), that might present the perfect short setup of being overbought and hitting overhead resistance at the same time. We'll have to see if it works out that way.

That's about it for now - I really don't know what else to talk about. I think the Fed meets this week so that may hold the market hostage for another few days along with more earnings. If you are looking for some plays, almost all of the short setups I posted last night still look pretty good at first glance after looking through them. As for the long setups, there still just aren't that many good-looking ones. All the reason I guess to keep my bias on the short side and remain ready to act soon. Good luck on Tuesday.

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