Friday, July 10, 2009

State of the Market - 7/10/09

Another rather "blah" day today on Wall Street, as volume fell once again as stocks meandered their way through the day, basically going sideways. The total intraday range on the S&P was under 10 points once again, indicating that not much was going on. The S&P fell slightly while the Nasdaq rose slightly, leaving the market mixed overall.

Technically, let's go over the good and bad. On the good side, the S&P once again held the last line in the sand at 875, getting as low as 872 before bouncing slightly and closing at 879. This is clearly now the most important support level out there and if it is broken, the selling will likely pick up once again. To the upside, 888-890 short-term could be resistance as the S&P still hasn't climbed back above that neckline area. On the bad side, the Nasdaq looks like it is forming a bear flag here underneath its 50 day moving average on decreasing volume. It looks similar to many of the patterns I showed last week in the videos and are typically very good short setups. When a stock or an index rides underneath a moving average without being able to get over it, it is not a good sign.

In terms of sectors and ETFs, both OIH and RTH are making very similar bear flag patterns right now on decresing volume and these are two areas I will focus on as I do my scans this weekend. Tech obviously will also be a focus with the Nasdaq looking like it does - I have not seen too many here but will look hard this weekend.

My outlook hasn't changed - I will be shorting any bounces and based on the weakness of the bounce of the past three days, that may happen soon. That is another bearish point - it sure looked after Tuesday that we were set up for a reflex bounce soon, but instead we have gone basically nowhere. Not a good sign for the bulls at all. I just hope I can find more appealing setups than I did last night. Hopefully I will and plan on sharing those this weekend in a video. Take care until then and enjoy the weekend.

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