SPY 30 min...shows just how bad today was for the charts. We did get a nice timely bounce but it also created on the charts a lower high. With a lower low tomorrow, it would be a confirmed reversal on the 30"...
QQQQ...a chart that shows strong resistance and strong indecision showcased by the doji's...a pullback would be healthy for this chart
IWM...another chart at resistance...in a bear market with fundamentals bad, can we really make a new intermediate term high? Sounds doubtful especially when looked on the weekly chart where 75 held as support all of 2007 and was resistance in 2006 before it broke out. Much significance here. Must have a huge catalyst in my opinion to break this level...
XLF....financials were the blame for the entire mess today and yesterday. They fell hard as oil strengthened. Fundamentals still look horrible here and despite me wanting XLF to break resistance today, i honestly would not understand the fundamentals behind it...makes much more sense for it to drop from here...
XRT another sector at resistance. After a huge move, we can see that it is stuck at a strong level of resistance. Very bearish volume and price action lately makes me bearish on retail...retail news made the market fall today...might it do it again tomorrow with more earnings news (WMT, JWN)?
UUP hitting resistance as well. After the gap, the dollar kind of just lost steam as oil was finally able to capitalize on that today. commodities have been strong today and yesterday...maybe its a sign of the lack of believers in the bullishness in the dollar.
USO finally had a legitamately strong day, and on good volume too. Lets see if it can happen again tomorrow. Also, it will be interesting to see how the market reacts to it. Today's strong relief rally in the market happened as oil actually strengthened. That is a very good sign that there are buyers out there despite strength in oil. But can it handle 2 days in a row of strong oil? indicators point to no...oil is definitely still important to the market...news of a retail slowdown are major arguements for it...
Analysis: Today's early weakness and subsequent strength in the market during midday made for a very wild options expiration wednesday. As i scanned my charts and saw that all major sectors and indexes are at resistance, i can't help but feel that the market is more likely to fall from here than move up higher. The drop might be a few days to a week, but falling down to test july's low is definitely not out of question. The 30" chart in SPY is similar to QQQQ and XLF and most other stocks and sectors out there today. It showed a lower high on the 30" chart and a setup for more weakness to come tomorrow morning that might give us a lower low as well. I might be totally wrong about this but i am 70/30 bear right now. I am putting my money where my mouth is too..i sold all my longs today and added a small short position in financials. Am i overreacting to today's price action? Thats always a very tough question...and that is why i am going into tomorrow with mostly cash. I feel that since we are struggling with both support and resistance, its best to sit with only a small amount of cash in the market as the bulls and bears duke it out. Once its settled, i will cherrypick myself some new positions. But for now, i am happy knowing that i will be mainly sidelined tomorrow.
Note: Daily chart of SPX should take precedent over the 30" chart, so if looking at that, we are actually supposed to bounce off resistance instead of fall from it tomorrow...
Game Plan: I will be on the lookout for new positions. The 30" chart will be important tomorrow and so will oil. A breakdown from the channel tomorrow and i will be 90/10 bear, but a huge volume rally from financials to break resistance, and i will be 80/20 bull. And a pause day will make me feel 60/40 bear. Knowing that anything can happen will make tomorrow mainly an observation day. With that in mind, my watch list today will be very brief...
Buy List:
commodity related (pcu, fcx, aks, x)
energy (mee, anr, bucy)
SKF
Sell List:
MER. LEH
EBAY
INTC, AAPL, MSFT
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