Tuesday, March 10, 2009

Large Number of Breakouts Today, But We've Seen This Story Before

Today was a very strong day in terms of 4% or higher moves - we had 1873 of them on heavier volume, which is the highest number I have had since December 16, 2008. That is a good sign for the bulls, but going back to 2008, we saw similar numbers on individual days but they didn't amount to much. We had big days on November 13 (selling reappeared the following day), October 28 (led to a five-day rally), and September 18 (led to one more day of buying before a big fall). We'll have to see if this time is different - maybe it is, but history suggests differently. As I've said many times, if we had more leadership emerging then a meaningful rally might make sense. As it is, we may get some more short covering, but I don't see any reason yet to expect more than that. Hopefully I am wrong - I would love to be able to go long for a few months.

Why Aren't There More Charts Like This?

Here are a few charts to look at showing the resistance levels I will be watching. For now, I decided to hold my FAS position since it is small and I have a gain, but I know that could be wrong. I plan on getting rid of it tomorrow, especially if the XLF can get up near the $7.60 area shown on the chart below. Good luck tomorrow.

S&P 500
Financials
All Charts from Telechart 2007, Courtesy of Worden Brothers, Inc.

2 comments:

bmbull said...

That ARST chart is interesting in another way -- on a day when the indices were up 6-7 percent, this stock was flat.

That would have to be a bit disappointing.

Mac said...

Very true, but after breaking out 30%, I'll give it a few days to rest.