Monday, August 16, 2010

State of the Stock Market - 8/16/10

A pretty slow day today on Wall Street, as stocks chopped around in another low-volume trading session.   Stocks started out lower today but immediately started rising, making the action look quite positive.   However, a little after lunchtime, stocks weakened and fell slowly and steadily into the close.   The Nasdaq was still able to finish with gains, while the S&P was basically flat, but both were off their earlier highs.   Volume as I said looks to be running lower.

Technically, I don't think today was bad for the bears at all - we were a little oversold going into the week and with all of the talk I saw about the Hindenberg Omen and crashes and what not, a bounce was to be expected.   That bounce, as of now however, is very weak - the bulls can't be very happy with today's performance.   As I said this weekend, I still think there is a chance we bounce a bit more, but with resistance above now and not below, I think it will take a MAJOR effort by the bulls to get this market rallying again.  Numbers I will be watching over the next few days are the 2220-2227 area on the Nasdaq and the 1087-1095 area on the S&P.  If these areas are reached, I will look hard at getting short. 

I was stopped out of my BIDU position today at $85.06 for a 1.2% loss.   I moved my stop up there and really shouldn't have done so.   I am still in my AAPL short however.   If we chop around for a few more days and don't go anywhere, I think there will be quite a few good short possibilities, but I came into the week not planning on doing much the first few days and I will stick with that plan.   If we miraculously rally here much higher than I expect, I do have a watchlist ready - IDT, EBIX, PWER, EDR, RDWR, CMG, NANO, FSYS, and SXCI all look pretty good as potential longs - but I don't expect a rally to materialize here and can't get comfortable going long with all my numbers on a sell/short signal.  

Good luck Tuesday - I'll share candidates as they become available, but I would rather wait a few more days for better setups.  Take care. 

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