Friday, May 29, 2009

State of the Market - 5/29/09

We had a very slow day for most of the day today on Wall Street, with stocks closing with gains but trading in a tight range for the entire session until the end of the day when they ran things up into the close for some (pretty obvious to me) end-of-the-month window dressing. Volume looks to once again be lower, however, and that takes off some of the shine. All in all, quite the boring day even though the media will paint it as a great day.

Technically, the range still exists and until it breaks one way or the other, there isn't much to do. There is a slight divergence right now between the Nasdaq and S&P, where the Nasdaq is right at the top of its range while the S&P is lagging a bit and is farther away. Both of these consolidations look bullish and constructive overall, but until we get a breakout, I don't know that I would be entering any longs yet. Even a day like today is so deceiving with the low volume and late push higher - it seemed so contrived. Maybe we get a breakout Monday and we start moving higher. I still hope that we can just avoid a bull trap if we do breakout, because a whipsaw reversal back into this range would be beyond frustrating. I worry about this option as summer starts and trading volume decreases, making whipsaws much more likely.

Since it's the weekend, today's post is short, but I will be back this weekend with some possible ideas depending on how many I find. I've posted some charts this week and most look just fine and are still consolidating. Someone posted in the comments the other day about a catalyst being needed here, and that could very well be true. Unfortunately, I don't know what that could be and when it will happen. I'll be on the lookout as best I can and as I've stated this week, just try to be prepared regardless of what the market does. Enjoy the weekend, and go Pens!

1 comment:

Giorgio said...

Hi Chart Swing Trader,

Yesterday you wrote "the range still exists and until it breaks one way or the other, there isn't much to do". But I think you mean that index haven't reached their resistance levels. For Example, the S&P hasn't reached the resistance level of 935/945. Isn't it? If I've understood what you mean, investors have to trade by market timing or short time strategies.