Tuesday, October 13, 2009

State of the Market - 10/13/09

Another rather "blah" day today on Wall Street, as the market seems to be in a small holding pattern here until the bulk of earnings start coming on and traders get a better picture of what to expect and how the market will react to the reports. Stocks pulled back at the start of the session, rallied into lunch, and then drifted back and went mostly sideways into the close, leaving the overall market basically flat. Volume was heavier but that is in comparison to two very low volume days on Monday and Friday.

Technically, days like this are exactly what you want to see if you're a bull, as a pause near new highs without giving much back in certainly not a bad thing. It lets the market work off some of the overbought conditions in preparation of a potential move higher. Unfortunately, I would guess today is the last "quiet" day this week as the big boys start with earnings and during the earnings season, technicals really don't work as well as they normally would. INTC reports today, JPM tomorrow, and GS and GOOG on Thursday - all of those will likely push the market one way or the other. The key numbers I mentioned from yesterday's post still hold true overall in terms of support and resistance. Oil made a little move today and is trying to break out of a long, choppy consolidation. That would bode well for the overall market.

I made two small trades today as I said I would during yesterday's post - I went into FAZ at $19.23 and SDS at $39.03. Neither are large positions and I am taking the outlook that if the market moves to new highs, I will be out of those "test" positions. I didn't see anything that I thought was worth buying in anticipation of a breakout, but I am fully aware that the market could make another leg up here if earnings cooperate, so I am not against going long. I would rather wait for the breakout on the long side however. From what I see, I have to lean slightly bearish but not in a manner that it is a guarantee - that's why the positions today were small.

Overall, we are in quite the interesting spot here from where I sit, as the markets are right at their former highs along with some of the companies with big reports coming out soon (INTC and BAC). We could get a move either way, and things are likely to get crazy the rest of this week with the earnings along with options expiration (I believe) on Friday, so take anything that happens with a grain of salt. We could see breakouts, breakdowns, reversals, and all sorts of interesting stuff when the earnings hit. It's probably going to more like a casino over the next few weeks than a market, and because of that, I don't know how heavily I will be trading. Good luck if you are out there taking big positions, though. We'll see you Wednesday.


Anonymous said...

INTC rocks AH. We going to the moon...better cover your SDS in the after market now!!!

Mac said...