Friday, February 27, 2009

State of the Market - 2/27/09

The market that goes nowhere continued today, as nationalization news and a 6% retraction in GDP caused stocks to start lower early on today, with the S&P breaking their December lows. At that point, it looked like things may finally break wide open. They didn't, of course, as stocks bounced quickly after the open and rose in a very choppy manner throughout the rest of the morning. Stocks moved basically sideways through lunch and into the early afternoon, and they tried to breakout around 2. This didn't work, and they fell back into their consolidation before falling more during the final hour to almost test their morning lows. They tried to bounce again, but couldn't do it and closed near their afternoon lows. Volume appears to be heavier.

Technically, both the Nasdaq and the S&P look like they will close below the lows from Monday and the S&P will close below the important November lows of 741 as well. I am kind of surprised that we seem to just be dripping lower here on such an important technical break, but it is what it is. We are probably getting back to oversold levels in the short-term but the trend is definitely down and as I said last night, since we could not get anything more than a one-day bounce on Tuesday, things are really bad out there and oversold conditions may not matter that much. We were extremely oversold after Monday and it mattered for exactly one day.

I made a few trades today with limited success. I shorted ITRI on the breakdown from the bear flag at $46.90, EDU at $43.43, and QSII at $39.00. EDU reversed higher and I was stopped out at $44.13 for a 1.8% loss, but that was actually good as it moved more than a dollar higher than that later. I was stopped out of QSII at $39.51 - I think my stop was ran on that one as it reversed lower at $39.54. ITRI worked pretty well and did what I expected it to do. I am up about 4% on that right now and will try to be patient with it as it acted technically well today - breaking down on heavier volume. I am hopeful this can get down to the $35 area it hit back in November.

It's Friday so I am not going to do a long analysis of things right now. I will be back this weekend with a video about where we may head from here. Take care.

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