Thursday, June 17, 2010

State of the Market - 6/17/10

Kind of a slow day today on Wall Street but a relatively bullish one even thought stocks were down a bit.   Stocks opened the day slightly higher but quickly sold off for the first hour of trading.  Given that the market has moved straight up for the past week, this could have been bad.   However, the bulls managed to keep the selling well-contained and even bounced the market back to the flatline - bullish action overall.  The action was also boring today as volume came in lower and it seemed like most traders were watching the World Cup or U.S. Open because there wasn't much happening overall.   Not that that's a bad thing - a few slow, boring days with slight pullbacks or sideways action is exactly what bulls should hope for here.  The U.S. plays tomorrow so perhaps even more eyes will be on that and the slow action will continue.

When you look at the charts of the Nasdaq and S&P right now, they look to be consolidating nicely the past two days, perhaps forming little bear flags.  Again, this would be very positive action if it continues.   On the other hand, the Nasdaq has still not really made a closing "higher high" so a roll over from these areas would be very bearish as it would complete a potential right shoulder on both indices.   Let's wait and see what happens - in terms of support, I wouldn't want to see the S&P get below their short-term 9 and 20 day moving averages around 1095 (which are also about to cross which would be bullish).  Ideally, the S&P will hold 1105.  On the Nasdaq, I wouldn't want to see the Nasdaq get much below 2265.
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I remained in cash today and with tomorrow likely being a slow day I will probably go into next week in cash as well.   My overall market signal remains bearish but one of the main two I use will likely turn bullish by Monday unless we see some heavy volume selling tomorrow.   I showed you some possible long setups this morning in the video and my basic outlook here is to be cautiously bullish.   If we rest tomorrow and hold support, I will get more bullish going into next week and start looking at taking long positions, especially if my signal turns bullish.   I don't see too much damage out there in leading stocks (beside ARWR) and if names like RBCN, NFLX, CROX, UAUA, LVS, DECK, and SKX take another day or two to consolidate, the setups will be there to play.  Let's just see what the market has in store for us - hopefully it's not a nasty surprise.  As always, I am not discounting anything and am not locked in one mindset. Take care and good luck Friday.

1 comment:

financial spread betting said...

I had a wierd feeling when trading on Friday. It felt quite surreal. Perhaps it is setting us up for a big week next week.