Tuesday, April 14, 2009

State of the Market - 4/14/09

A down day today on Wall Street, which in and of itself isn't a bad thing, but the bulls were not as resilient as they have been the past few weeks today. The day started with a gap down from which the market immediately tried to rally from. This rally attempt took the indices almost back to flat for the day, but it quickly lost steam around 11:00 and stocks fell hard for the next two hours, hitting a temporary bottom around 1:00. The rest of the day was choppy with a slight upward bias, but stocks still finished with decent-sized losses. So finally we see a day were the bulls couldn't fight back much to close off their lows. More worrisome is that volume was definitely higher on the Nasdaq and appears to be higher on the S&P as well. That gives the indices a distribution day.

Technically, one down day does not destroy this rally and as long as the bulls can hold 835 and 1600 on the S&P and Nasdaq respectively, then I think we have the potential for more upside. Both the uptrend line for this rally and the 9 day moving average is in this area, so a break might be significant. Of course, we had a severe break on 3/30 that at the time looked like it would be significant as well but the market just kept rallying from there so who knows? The financials pulled back as well today on higher volume, but if XLF holds the $10 area, then they are probably OK as well. I will be watching closely how the market acts around those levels.

I didn't do anything today but to be honest, I am itching to short this thing. That of course has gotten me in trouble so far however, so I am trying to be patient and get some confirmation on a possible trend change. If we break the areas mentioned above, then I will seriously consider it. However, none of the stocks in my long watchlist from yesterday were really damaged today, so I can't get too bearish yet. If you are a bull, we just might be looking at another little pullback that can be bought. It is really hard to say right now which of those things we're looking at, and again, that's why I would rather wait for some confirmation before making any big moves. This is especially true with all of the earnings reports coming out right now.

Things are settling down a bit here at home so if I have time, I will try to get a video out tonight or tomorrow. Good luck Wednesday. Take care.

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