Wednesday, February 25, 2009

State of the Market - 2/25/09

This commentary will be a little shorter than usual as I was away from my computer most of the day and made no trades. It looks like we had an up and down session - down in the morning, up in the afternoon, and then back down into the close - that really puts things up in the air a bit for both bulls and bears in the short term.

What I was hoping for today is a gap up this morning that would push more shorts to cover and get us up to the levels I mentioned yesterday where I could put some shorts on. Rarely does the market give you what you want. As soon as I saw us open lower, I figured I was done for the day as the setup I was hoping for didn't take place. I was surprised we opened lower, and at that point, I expected some more heavy selling. I kind of said, "uh-oh" when I saw immediate selling after yesterday's big gains.

I have to admit that when I saw the upside reversal in the afternoon, I began to think I may have to reassess my bearish outlook, as a positive close in the face of the opening selling would have been very bullish. That reversal of course didn't last, and the nasty close really just puts things up in the air from my perspective. We are no longer oversold, but we are not quite yet overbought either short-term. Overall, I am going to try remain neutral but my guess is that any more bounce we get still looks like a good shorting opportunity. I will focus on the same levels I mentioned yesterday and we get up that far, I think we would be overbought and the risk/reward for shorting would still be good.

Kind of rambling here so I am going to wrap this up. Hopefully my scans will give me a better feel for what's going on out there right now. Good luck.

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