Monday, October 5, 2009

State of the Market - 10/5/09

We had a bounceback session today on Wall Street, as stocks started the day slightly higher and continued higher in a very choppy manner throughout the day. The S&P had much more of an uptrend going today than did the Nasdaq, which moved almost sideways for most of the session. Volume was very low today and that is something to pay attention to closely.

Technically, the S&P and Nasdaq both closed very close to key support levels on Friday in the form of six month uptrend lines (the Nasdaq actually closed slightly below its support level) so a bounce today was not suprising. We'll have to see where it goes however from here. The indices closed just below their two short-term moving averages and they may act as resistance in the short-term. Watch around 1045 on the S&P and 2085 on the Nasdaq over the next few days to see if those levels can be overcome.

It was a busy weekend for me and my family as we were away for most of the two days and got home just a little before the Steeler game started at 8:15 (can't miss that in my house) so although I was able to go through my scans this weekend, I wasn't able to put a lot of thought into them. I did find some stocks pulling back calmly to support levels, but overall I felt that this was a time where "wait and see" might be a better play than anticipating a bounce one way or the other. For this reason, I didn't put a video up this weekend, although many of the setups that did show up last night worked out well today. There will be other opportunities down the road however - no big deal for me. I do apologize for not getting something out if you were looking for it.

Today could be the start of something meaningful or it could be just like last Monday was - a big up day after the indices touched support level which led to just more selling. Volume was very weak last Monday, much like it was today and that is worrisome. I said last Monday that I wanted to see immediate follow-through for the bulls, and it didn't happen last Tuesday, which did lead to some heavy volume selling. Basically, I am looking for the same thing right now. If the bulls can't get us past the short-term moving averages tomorrow, then I think the top will continue to form and perhaps pick up some steam to the downside. If they do move us higher tomorrow, then this may still be just a healthy pullback. Based on recent volume patterns, I am leaning to the former of those two options, but I think it is a little too early to tell for sure either way. That's why I am taking things slowly here. Good luck Tuesday.

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