Friday, January 9, 2009

State of the Market - 1/9/09

Today was setting up to be a big day with the jobs number coming out from December, but it turned out to be the exact opposite, as stocks swooned early but then did nothing but go sideways in a low-volume environment. When the number came out this morning around 8:30, futures responded positively and based on the reversal yesterday, things looked promising for a rally. They spiked a bit at the open, but the indices immediately reversed and fell quite hard for the next twenty minutes, with the S&P falling all the way down to the 890 area that I have talked about this week. That area did hold, and stocks bounced quickly. They fell right back down to that area, though, held again, and bounced a bit up to the lows of yesterday, which acted as resistance and stocks basically moved sideways in a channel for the rest of the morning and into the afternoon. Stocks tried to break out around 2:40, but nothing was happening, and they drifted back down to test support again around 3:20. I am wrapping this up a little early today (around 3:40) so maybe something big will happen in the last twenty minutes (forgive me if it does) but I somehow doubt it. Volume appears to be lower today or at least feels low.

Technically, a lot of the overbought conditions we had to start the week have been worked off for the most part and we're actually getting oversold in the short-term. Now if we broke through support today on heavier volume I wouldn't worry about being oversold - I would have had no problem getting short some names. Since we didn't, and support held, I am a little hesitant to short here. I did see some individual breakdowns todays but due to the slow trading I didn't take any of them. I'll continue to watch that 890 level as key support and as long as it holds, I guess I lean to the long side more right now. To be honest, I don't know. This week was a little bizarre - I expected a more convincing move one way or the other with heavier volume as the new year started in earnest, but we didn't get that. We got a whole lot of nothing.

I was ready to buy some stocks near the open but luckily paused as I wanted to see how things held early on. My only position was LVS from yesterday, and that was stopped out at $7.16 for a 1.75% loss, although my stop was at $7.23 so I got another bad fill on my stop. After seeing the reversal hold right around support, I had a feeling today would be difficult and didn't do anything from then on. That turned out to be a good idea. I had some shorts on my watchlist (FSYS, NEU, WGOV, BRC, RMG, RL) but really was wanting a break of support before going short. I never got that. I still had an eye on a few longs but also passed without a strong bounce - VISN broke out nicely but didn't have the volume I was looking for.

Today was one of the more boring days I can remember for a while - very slow and nothing got accomplished. Hopefully trade will pick up next week and we can get some moves that allow things to be easier one way or the other. I'm off to get a sled for my son's first sledriding experience tomorrow since we're due for 3-6 inches here in Western PA. In between that and football this weekend, I'll try to get a video done. Take care and enjoy the weekend.

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