Thursday, September 23, 2010

State of the Stock Market - 9/23/10

Not a great day today on Wall Street, as although further pullback is completely normal after the run the market had for the past few weeks, the intraday action was certainly not bullish.  Stocks started the day lower and right at key support on the S&P, but immediately bounced off of that level as dip buyers came in.   As the market turned slightly positive by lunchtime, things looked very bullish.   Stocks drifted lower after lunch but then around 2:00, the selling picked up a little steam and stocks gave back all of their earlier gains, finishing near their lows for the day.   Volume does appear to be lower however.

Technically, the Nasdaq remains in fine shape overall after the past three days as it is still above its 9 day moving average and former resistance around 2305.   The S&P however did close below its July highs and just slightly below its 9 day moving average.  Nothing major to worry about yet, but I want to see the S&P hold in here over the next few sessions.
Nasdaq
S&P 500
Charts from Telechart, Courtesy of Worden Brothers, Inc.

While the S&P and Nasdaq are hanging in there OK, I do see a few worrisome signs from the Russell 2000 and financials.  Perhaps it is nothing, but there are potential negative divergences here as neither broke out this week and are leading to the downside the past few days.

Russell 2000
XLF
Charts from Telechart, Courtesy of Worden Brothers, Inc.

I don't see too many breakdowns today as I run quickly through my scans so I guess everything remains relatively positive for the market.   At the same time, however, I just don't see any long setups emerging either, which is very weird.  I would expect after a three decent days of consolidation/pullback in this market that some nice flag-type formations would be there to trade, but I don't see them.   Actually I see a lot of stocks continue to wedge their way higher (CRM, AKAM, and LVS for example) or continue to extend themselves to perhaps dangerous levels (BIDU, EDU, NFLX, INFN, AMZN, and AAPL for example).

Because of what I see in my scans, I am going to remain in cash for the time being as there just isn't anything that interests me.   I was stopped out of my CVGI position today around $9.90 as it broke its 50 day moving average and my long watchlist remains small.   Perhaps with a few more days of sideways action the market will give us more setups, but for now, they are missing, at least from what I see.  Again, that is odd.

There is nothing obvious that says we are doing anything more than pulling back a bit here, and therefore there is no reason to be bearish at this juncture.  Things can change in a hurry, however, so be on alert.  Good luck Friday.

2 comments:

SStrader said...

market will probably drop for the next month, hold onto your butts.

cool charts!

SStrader said...

my recent comment just posted, but im long only now, odds changed. if anyone cares.....