Monday, February 8, 2010

Quick Monday Thoughts

Nineteen inches of snow Friday night here in Pittsburgh pretty much dominated my entire weekend, so I did not get much chance to go through my scans or do anything stock-related. As the week starts, here are some quick thoughts.
  • I still tend to think Friday was nothing more than a lot of short covering before the weekend. If it was a true, panic-driven bottom, I think volume would have come in much higher than it did. We could certainly bounce further, but I think there is just as likely a chance we reverse today and close down again. I would describe myself as completely market neutral right now. I hear a lot of people thinking Friday was a big bottom however - something to think about.
  • Futures are slightly lower as of now. If Friday was true buying and the start of something very meaningful, I would expect that momentum to continue at least into the open today. I am surprised we are not gapping up, especially considering how bullish Mondays have been for so long, but perhaps that goes back to the previous point that Friday could have just been a one-day thing.
  • Some key levels to watch in some key sectors that might give a clue as to whether Friday's bounce will continue - 1073-1075 on gold needs to be taken back. If it's not, I doubt we move much higher. Same with $14.00 on XLF - if this is taken back in a convincing manner then I would turn more bullish and consider a bottom here more seriously.
  • The dollar is extended and the negative correlation between it and the overall market is certainly back - a pullback would be good for the dip buyers on Friday.
  • I am still in my NYX and BCS short positions as of now and managing those two may be all I do for a few days. The reversal messed up a lot of setups on the short side and I would rather wait a few days before trying those again. Not too many longs that look great either - the few I would consider include CROX, MR, XTEX PUDA, VISN, and XTEX. If Friday was meaningful to the bulls, I think it might take a while to fix the damage done in the previous sessions. Individual charts are very choppy right now.
Good luck today and throughout this week. Congratulations New Orleans - you deserve it.

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