Tuesday, June 30, 2009

State of the Market - 6/30/09

Not a great day today on Wall Street, as stocks slid hard after the first fifteen or twenty minutes of trading all the way into lunchtime and then went into consolidation mode for the rest of the session. It appears that traders turned their screens off at lunch and never came back into the office, because the afternoon was very slow. Volume was once again lower, and will likely continue to be low this entire week.

Technically, the 930 area was hit briefly today and the S&P immediately reversed off of it. If that area is overcome, then I would likely reassess my bearish outlook, but there is no reason to do so yet. Support for the S&P is first at 905 and then at 890. It's looking like that 890 number is where the neckline will be for this possible head and shoulders pattern - if it is broken, then the pattern would be confirmed and a top would also be confirmed in this area. The Nasdaq did hold the 1810-1820 area I mentioned last night as short term support and continues to outperform the S&P. 1880 remains upside resistance for the Nasdaq.

In terms of individual patterns, the oil and commodity stocks that I've been pointing out here for about a week now did start to reverse lower in many cases today - the only thing I would want more of in these stocks is volume. It figures that all of these setups would come during one of the quietest volume weeks of the year - oh well. Some like FCX are just hanging on to their 50 day moving averages and I would really like to enter these on a break of these levels just for some confirmation. Overall, I did not see many drastic breakdowns today (mainly 1-2% losses) in my individual setups at all and that is good for the bulls. But the patterns are still there and another day or two like today and the right shoulders will be pretty clear on most of these setups.

On the long side, the story remains the same - not much that interests me besides a few stocks (CAEI and STEC) and DDRX and KIRK continue to go higher and higher. I expected to see a reversal in these stocks today but it wasn't to be - that shows you that the selling wasn't that strong. I guess those two will be at $100 a piece by September, right?

Overall, today was much like yesterday except reversed. We saw nice percentage gains in the indices Monday, but the individual stocks didn't show much going on. There were some decent sized losses today, but the individual stocks didn't show much damage. I hope I am wrong, but it may be like this the rest of this week. Based on the patterns I see, I want to take some trades but this market is so slow right now, I am wondering if the patterns will work the way they should or not. Something I have to think about a little more. Good luck Wednesday.

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