Monday, June 8, 2009

State of the Market - 6/8/09

A wild and crazy day on Wall Street today, as stocks moved significantly lower in the morning before absolutely exploding in the final hour to close with gains. The day started with a gap down and further selling that took the S&P down to key support right around 930. The market bounced for a bit, fell back down and in some cases to new lows for the day, but once again righted itself and moved higher for most of the afternoon. Around 3:15, stocks took off to the upside, with the S&P gaining 12 points and the Nasdaq almost 25 points in less than 15 minutes. Those gains faded a bit into the close as stocks finished basically flat, but well off their lows for the day. Volume appears to be very light.

Technically, today was another strong showing by the bulls as they held support, and really, that's all you can ask from them. The S&P continues to hold its 9 day moving average, the 200 day moving average, and its previous breakout point, all very bullish developments. The Nasdaq reamins well above its previous breakout point but also held its 9 day moving average today. Short-term, resistance for the Nasdaq is 1865 and for the S&P, it's at 950.

In terms of individual stocks, I did see a few nasty moves lower today in some leading stocks (JST, KIRK, MED, and TNDM) but sometimes this happens with these small caps. I would be more wary though if I see more big volume moves like that in more stocks. Overall, my watchlist held up well - I see stocks like CVGW, RAX, MAPP, SIGA, ORCC, JCG, GPOR, and PXP consolidate very nicely and continue to hold short-term support. I am very much considering putting a few trades on in a few of these names with stops below short-term support.

Overall, we have had a lot of chop and misdirection the past two days, but that typically happens when markets consolidate. Perhaps the arrival of summer is making for these volatile, light-volume moves, but so far, that's what looks to be happening right now(consolidation)., Unless support is broken and I start seeing some breakdowns in individual stocks, there is no reason I see to be bearish here. I plan on focusing on my watchlist and as I said, entering into a few stocks depending on how they continue to consolidate. If we do break support, then I will be ready to go on the short side a bit. Good luck Tuesday.


CLW, Portland OR said...

UH-OH..if you're talking about going's time to short....LOL

Mac said...

Thanks, but I've been showing possible longs for about a week or so now, at least a week. I did miss the big rally and I admit that, but now I am putting my biases aside. It is pretty obvious just based on technicals that the bulls remain in control until support is broken.