Friday, March 13, 2009

State of the Market - 3/13/09

Another up day today on Wall Street - that makes four in a row - as traders shook off a mid-morning selloff and sent stocks modestly back into the plus column as the afternoon progressed. They closed with those modest gains, and they came on lower volume. I still don't see heavy enough volume over the past four days for me to really think this is an important bottom. We'll see I guess, but I still think that's a big deal.

Not much to say here other than what I said last night. We are overbought short-term and a pullback or consolidation period is needed in order for this to be more than a bear-market spike. Pulling back calmly after nice moves higher is what healthy markets do. Healthy markets typically don't just continue higher and higher without rest - that's what bear market spikes do. I can't chase any longs here unless we get that consolidation. Meanwhile, as we get more and more overbought (and let me be clear - we have a little room in this respect but are at levels where a pullback is very likely), the more and more I will look at putting a few shorts on with tight stops.

I plan on getting a video done this weekend at some point, showing some of the charts I am watching. Unfortunately, there still continues to be a lack of great leadership out there, but maybe I'll be able to find some in my scans. I also have some short setups that are looking decent in terms of risk/reward. Until then, good luck and enjoy the weekend.


Anonymous said...

Mac, I hope the baby is doing well and you guys are adjusting to life wirh no sleep.

Hey, where do you think the "top" is on the S&P? I, frankly, thought it would be around 750, but I'm obviously wrong.

What's the McClellen telling you?


Mac said...

Thanks - it is certainly a big adjustment, more for my wife than me. She has the much harder job. Boy #2 doesn't like to sleep unless someone is holding him, which kind of makes things difficult. One of the reasons I haven't posted as much.

As for a top, I don't necessarily think there will be a "top". It doesn't have to be a top. Maybe we do just pullback calmly and then head higher from there. I just think short-term we are very much due for a pullback and after I see what type of pullback it is, I will adjust my plan accordingly.

I'll go over the oscillators this weekend in the video.