Thursday, March 19, 2009

State of the Market - 3/19/09

A consolidation day today on Wall Street (finally!) as stocks gapped up to start the day, but the heavy resistance they ran into as well as the extreme overbought conditions facing this market caused them to reverse lower. They sold off until lunchtime, when they tried to bounce a bit, but by 2:00, the selling continued and stocks moved lower into the final hour. They basically chopped their way sideways for that closing hour but did close at their lows for the day, finishing with moderate losses on lower volume.

Technically, I don't see any problems with a day like today. If we see a few more exactly like it, I would start to get bullish. I didn't sense the selling was heavy, and as long as the support I mentioned on the video last night (around 750 for the S&P and 1410 for the Nasdaq), this pullback will be great and allow the market to move higher maybe next week in a more powerful way. We'll have to see if we can continue to pullback tomorrow. We are still overbought so one day does not increase my desire to go long.

I made two trades early in the session - SDS at $80.25 and QID at $51.01. They weren't really big positions, but I felt I had to take a shot when the market gapped up like it did. As long as the selling stays controlled, I will likely look to exit these rather quickly.

Tomorrow is options expiration so anything can happen. I am hoping for another day like today, not only because I am short, but because it would be perfectly healthy action for a market that has moved so far so fast. Hopefully, that happens. Good luck Friday.

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