Wednesday, November 3, 2010

State of the Stock Market - 11/2/10 - "So Much for the News"

One of the biggest news days in a long while on Wall Street turned out to be a flop today in terms of movement, as stocks moved around intraday but really went nowhere overall.   Stocks started the day slightly higher, then moved lower with small losses into the 2:00 hour when the Fed released their "decision".  From there, stocks dropped sharply but then rose just as sharply, finally chopping around in the final hour to finish with very slight gains.   Volume looks like it will be heavier. 

Technically, today looks like a "nothing" day, meaning that nothing really changed.   The Nasdaq is still right around its May highs and remains in a very interesting technical position, having risen very sharply into important resistance.   The S&P and Russell remain in sideways-type consolidation patterns and overall look bullish, although the S&P does appear to be wedging higher a bit.  All in all, since we never saw that breakdown that was certainly a possibility during the past two weeks, I have to think the market can move higher from here on a breakout.   We'll see if it comes.

Friday is the jobs number so we aren't done with data this week - perhaps that is the reason the overall reaction to the election and the Fed QE2 decision was so muted overall.   Maybe traders are just trying to figure this all themselves, because there are a lot of potential ramifications from the decisions made last night and today.   I think (or at least hope) that we will get some closure by Monday as to which way the market wants to move from here, but it may take longer than that.   If it's up, I am fine with that.   If it's down, I'm fine with that too - I am just trying to be ready either way.   In the meantime, stay small and stay nimble.  Good luck Thursday. 

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