Stocks staged a very nice intraday reversal, reversing what was yet another day of indexes in the red. Thankfully, a breath of fresh air came with less than two hours to go as indexes reversed rallying to the end of the day.
The Dow Jones Industrial Average was up .5%, the SP 600 was up .4%, the Nasdaq rose .3%, and the SP 500 stopped the bleeding and closed higher by .2%.
Volume was higher on both the NYSE and the Nasdaq, marking this as day one of an attempted rally. However, I don't care about the first three days of any rally. It is the fourth to tenth day that interest me. Breadth was positive on the NYSE by a 9-to-8 margin and was positive on the Nasdaq by a 8-to-7 margin. Not a bad day but after hours...
...YHOO took a nice hit along with GOOG. That will surely weigh on the indexes in the morning. A quick rebound from this afterhours hit would be very positive for stocks and this oversold bounce. However, I would not count on this rally lasting. Something just doesn't feel right. It is the poor leadership or lack of leadership I should say.
This market is just being hit left and right with news items and is completely under siege. Tomorrow we have two more big economic events: The CPI and the Fed's outlook. This along with the conflict in the Middle East is simply too much for the market to handle in a rational fashion right now. Throw some earnings reports on top of that and you have a lot to deal with.
This market is simply sick but is oversold on many oscillators once again indicating that there should be a short term oversold rally. However, I wouldn't expect much more than that. This market is simply sick and the previous two rally attempts have failed. While this happened, oddly, bullishness picked up last week on all the sentiment surveys. This is just not what you see at market bottoms. More time is needed.
But the market is oversold and the Ben Bernanke comments could be the fuel needed to help the market bounce. This bounce would also coincide nicely with all the questions I am getting on shorts recently. It appears that once something is obvious to everyone we may have run our course on a short term basis. That appears to be happening now, in the short term.
Whatever happens, just make sure you keep cash extremely heavy and keep all longs very small if you must take them. And only short if you have proven you can make money on the long side first or if you have proven to yourself that you do know what you are seeing on the charts.
This market is still in a solid downtrend but is very oversold. A bounce should be expected but until I see more pretty charts (which simply do not exist right now) and less stocks setting up in EXCELLENT short patterns I am staying patient and keeping all buys small and holding my shorts.
Great luck out there. I want to take another vacation! Keep smiling and stay positive.
New Swing Longs: TTG
New Swing Shorts: WPS BLK ICE HTLD
Longs Outperforming: GPIC HSR-60 RNST JTX ABI BMR CTCI-71 HMSY AKAM-106 IHS-39 CXW BWP ABFS CTXS-33 SEIC DGX LRCX-25 CPY KHDH TRMA DLP ATML AMV
Shorts Outperforming Market: NTE SWC JOYG USG ELY WSM RTP TRI MEOH IKN ZRAN BTH APOL ISCA GTRC GYI XNPT MAS TXRH ULTI CXG AMMD POOL DB EWQ PWC PKG VO TM SUPX PDCO
Stocks On Radar Screen: RBN
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