Friday, January 22, 2010

State of the Market - 1/22/10

Another awful day today on Wall Street, as stocks once again started lower due to disappointing earnings, tried but failed several times to bounce in the morning, then fell steadily lower after lunch and through the afternoon, especially into the close. Volume does not appear to be as strong as it was yesterday but given the selling I don't know if that is any solace.

Since it's Friday, I'll keep this short (and there really isn't much to say anyway). Things are obviously very bad right now and it certainly looks like we have entered into correction mode. Who knows how long this correction will last, but from what I see, it does look different from the many sharp, quick pullbacks we saw last year. For that reason, I am thinking this is going to be something meaningful (maybe several months) and there won't be much to buy for a while other than potentially short-term oversold swing plays. This long-term chart of the Nasdaq that I posted on Twitter on Monday and on the weekend video shows one reason I am thinking a pullback could be meaningful.

Nasdaq 2005-Present
Charts from Telechart - Courtesy of Worden Brothers, Inc.

I'll go over this more in the weekend's video but hopefully you haven't been damaged too much the past three days. I do get stopped out of a lot of positions, but there is a reason why and days like today and yesterday always help to remind why. I was quite content being in cash the past two days and may be in cash for the near future. We are getting quite oversold in the short-term so a relief bounce soon wouldn't surprise me, but I don't know if I want to play it or not - depends on how lucky I feel. More than likely, I may be sitting back for a little back until we get some weak bounces in stocks that in all likelihood will set up nice short plays. I'll leave. Take care and enjoy the weekend.

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