Monday, November 30, 2009

State of the Market - 11/30/09

A slow and boring day today on Wall Street, albeit a higher one, as stocks rose early on, pulled back to their morning lows by lunchtime, and then slowly climbed back into positive territory by the end of the session. Some late-buying/short-covering allowed all indices to finish at their highs for the day and with modest gains. I am sure volume is heavier than Friday's half-session but I don't yet know how it compares to volume earlier last week.

Technically, we are basically still in this sideways range shown last night on the video (1080-1110ish on the S&P and 2140-2200ish on the Nasdaq) and until we break one of those levels, trading lightly probably remains smart. Financials via XLF bounced back nicely today after a bearish gap down Friday but still remain below their 50 day moving average. Oil also bounced back today as the dollar was down slightly.

I did watch the open closely today looking for potential movers from last night's video, but the only one that stood out was CAAS. It moved about $1.50 in less than two minutes this morning, and realistically there was no way to catch an entry perfectly as it moved above the $17.60 level in a flash. By the time it settled, it was extended so I passed. However, that stock acted very well and if you did get a good entry, congrats. Anticipating the breakout would have been key there. A few other China plays like RINO, CYD, and SEED all were strong momentum-wise today and day-traders probably made some money in those names. However, these names are getting a bit frothy so be careful - don't chase them.

Overall, not a whole lot changed today. It seems like Dubai may be just a little blip news-wise as it is bullish to see the market bounce back off of Friday's bad open with very little difficulty. However, all of the negative divergences remain out there, with both the financials and small-caps continuing to lag the other indices (although to be fair both put in some bullish action today). There are small pockets of momentum to play in individual stocks if you are so inclined, but overall, light and careful trading probably remain the best strategy here, as the market remains tricky overall. Good luck Tuesday.

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