Friday, March 20, 2009

State of the Market - 3/20/09

Sorry for the late post - finally got through watching my Pitt Panthers almost throw up in the first round of the NCAA tournament. I used to coach basketball and I can't tell you how frustrating it is for me to watch a team play stupid and undisciplined, but that's what they did. At least they won, I guess, but that was certainly scary for me.

Back to Wall Street. Kind of a boring day today on Wall Street, especially given quadruple witching, but "boring" is not a bad thing from my perspective. Maybe traders were too busy watching basketball. Both the S&P and Nasdaq opened slightly higher today, but that open was slowly and methodically sold off for the rest of the morning. The selling picked up after lunch and stocks did close near their lows for the day. Volume was mixed - higher on the S&P and lower on the Nasdaq.

Although I am short and my viewpoint may be skewed a bit, I don't see anything wrong with the past two days at all. On the video Wednesday night, I said that if the market pulls back calmly and works off the overbought condition it built up, then I would start to get bullish. Basically, I think that is what has happened the past few days. I have not sensed at any time any heavy selling, and for as overbought as we were, it would have been very easy for the market to tank. A 2% down day on the S&P might seem like a big deal, but when you consider we rallied 20% in less than two weeks, I think this pullback has been completely reasonable. As long as the 750 area on the S&P and the 1410 area on the Nasdaq hold, then I think this is nothing more than a bullish consolidation. Now if we don't hold those levels, then maybe we have a different story, but for now, I see the action of the past two days as perfectly healthy.

I made no trades today - still just sitting with my QID and SDS positions from yesterday and both are doing well so far. I'll be back at some point this weekend with a video after I do my scans. I am hoping for a few more days like today - it will allow the market to refuel itself for hopefully a much bigger move higher. If it doesn't and we head much lower, that's OK for me too. Take care.


Charlie G. said...

Hey Mac, glad to see you haven't been stopped out of some positions for a change!

Thanks for the videos, I know sometimes you worry that you repeat yourself but I appreciate the consistency and sometimes things sink in for me after a couple time.

Will be interesting to see if we have some more upside here (like a short term higher low), or if we fall to new depths. It sure "feels" different this time - though I won't be doing any trading on that feel.

Hope your teams win unless they're playing mine!

Mac said...

I'll probably get stopped out Monday when we gap up 300 points. So far so good though.

Who's your team, Charlie?

Charlie G. said...

They (Univ. Mich) just lost to Oklahoma tonight - still can root for Mich. State tomorrow. How about you?

Looks like Treasury head may unveil bad assets/bank plan on Monday, who knows how the market will react to that. I have a small position long of junior gold miner open, we will see what happens.