Monday, June 7, 2010

State of the Market - 6/7/10

Another very bearish session today on Wall Street, as stocks could not bounce at all following a shellacking Friday, and ended up closing at their lows for the session once again with large losses.   The market opened up slightly and tried to bounce in the first hour of trading, but couldn't get anything going.  They sold off for about an hour, tried to bounce again starting around 11:00, but that attempt also failed and after some sideways action until around 1:30, stocks fell hard into the close.   The Nasdaq led the way to the downside with a loss of almost 2%.   Volume looks to be lighter but that's the only bright spot at all in the action.  

Not much changed today in regards to what I said yesterday.  The "rally" that lasted one day is dead, and right now the only thing to do is sit and watch from the sidelines or short when you can.   In hindsight, I wish I would have gone short at the end of Thursday's session as I though it was a good technical level, but with the jobs number due, there was no realistic way for me to start a position there.   Oh well.   We are a little oversold in the short-term but there is no reason we can't go lower from here.  Maybe we bounce a bit when the market gets around 1040-1045 on the S&P and 2140 on the Nasdaq (where it could get some support) but any bounces we get should be shorted.   It is starting to look like the past three weeks was just a very choppy consolidation phase before this market moved lower.  

Gold had a nice session today and that is about the only positive I see out there right now.   I saw further breakdown today in some individual "leaders" shown in last week's video or posted on the blog at some point last week, and this is obviously bearish as well.   Names like CSTR, OSTK, DNDN, CRUS, DCTH, ATSG, RPTP, and CREE look like death and that's a sign of further selling for this market in the future.   The only stock that I see continuing to hold up is VMW, which is one to watch.

Story remains the same - be very careful out there.   I am still on the lookout for shorts but since I would rather short rallies than breakdowns, my work is cut out for me.   Good luck Tuesday.

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