Friday, November 13, 2009

State of the Market - 11/13/09

Friday the 13th turned out to be a little scary for the bears today, as stocks did bounce back a bit today due mainly to dollar weakness. The market started only slightly higher, but from there steadily rose through the morning into lunchtime. They broke to new highs around noon, but really couldn't move any higher and challenge yesterday's highs. Around 2:00, there was a sharp pullback but the market did bounce back into the close to finish with decent gains. Volume was lower as has been the case recently on any up days we've seen.

Technically, the bears saw no follow-through to yesterday's heavier volume sell off and still may not be ready to take control of this market. Both the Nasdaq and S&P could possibly be forming a little handle here on a cup pattern - however, the volume patterns are still completely wrong, with several heavier volume declines and very little upside volume in the cup. You know what that means, right? Yes, we will probably break to new highs next week based on the way this market has acted this year. Common sense and historical tendencies?? Forget about it.

The dollar had a very rough day today and has really been chopping around recently. UUP almost broke to new lows for the year and you know the drill - if this happens next week, I would expect the market to rally in reaction.

Going through my scans last night, I saw many short setups and everything I see continues to point to that side of the market, but that really hasn't meant anything this year so who is to say it will mean anything now. I am still in my three inverse ETFs but added nothing today and remain mostly in cash. If we happen to breakout and nice charts set up, then I will have to consider going long, but right now there just aren't many nice charts at all.

It's Friday so I will end it here - I'll try to be back at some point this weekend with a video or more commentary but it looks to be a busy two days so I can't promise anything. Not that there is a lot to say - the market seems to just be moving in response to the dollar so whatever happens there will likely dictate where we go. Enjoy the weekend.


Jason said...

Hey mac,
yeah the volume was very light, and I still have to look at what has been going on, but overall the problems I have seen last week seem to be still out there, and now the lowest volume day on the Dow in 25 trading days; financials were weak today, all day; the dollar was down but oil was down also? I'll have to do more research this weekend since I have been out of town, but I'm looking forward to additional earnings and economic reports leading into options expiration.

tony said...

I trade the TSX and daytrading for the last week has been like staying at a party where everybody's gone home already. The market feels really sketchy.

Anonymous said...

Like I said many many times here before...just close your eyes and buy the indices till Jan at least. Its money in the on it! The feds/govt needs a decent holiday season. Cant you see/eel they are really afraid of even a decent correction. Any pullback is a buy oppt.

Jason said...

I am doing some research and have noticed that the Nasdaq has the lowest average mount of stocks participating in the up-move from the beginning of this month, in the last 5 1/2 months, The NYSE is showing about the same. The Nasdaq volume patterns are about the same
as the last upleg, very poor with a decrease in overall volume. Also the 52 week high patterns on the NYSE are the lowest in the last five months, and have seriously
contracted in comparison to the last up leg. Also, everything I posted on Nov 7th seems to be still in place. But all this means right now is that it is very prone to break down from here, and that all depends on the dollars direction until that relationship ends. We
have a bunch of economic reports coming out Monday through Thursday, the dollar is at what can be support until its seriously broken, and options expiration on Friday, so some big moves can occur this week and should be fun to watch. Looking over individual stocks and industries, this market looks like it can go higher from here, and has a line in the sand feel to it, but if we dont capitalize on fridays move on Monday and stay out of the red, then I think we are looking at more downside and a red week for the markets, and a great week to be long the dollar.

Mac said...

Jason - you make excellent points and all of them make very good sense - I agree with your case. As I've been saying, however, we've seen these bearish signals before and they haven't amounted to anything for whatever reason, so you have to remember that. I keep thinking at some point the market will go back to being somewhat reasonable and those points will matter, but we're not there yet it seems.

Anonymous - that's fine to just say "close your eyes and buy" and you know what, you may be right. But as a technical trader, when you see so many bearish signals out there, it is next to impossible to just put what you see aside and buy "on a hunch" or because that's what seems to be working. That's why this has been a tough year for me - the technicals in most cases haven't worked well.