9/4 - Market Analysis

SPX...sliced right through strong support invalidating the uptrend and confirming the bearish flag today. should go down to july lows if not lower before we are done. But as we have already fell hard today, tomorrow has a good chance to either pause or slightly pullback a little off this potential support we are sitting on...


QQQQ...damn i wish i shorted this yesterday when it broke the channel. great trades today here as QQQQ again showed lots of weakness. SMH is the reason...and the strong dollar is the reason for that...tech has stayed relatively strong in the past months because of strong sales overseas (due to the weak dollar) but as the dollar strengthens and global growth begins to slowdown, we have a sector rotation going on. With any bounce, i will short a tech stock...


SMH...the culprit for the weakness. As seen in INTC and GLW, semis are very weak and very vulnerable to the dollar strength and a global slowdown. The break of multiyear support today makes for a great sector to short.


XLF...financials were actually weakest sector today...the market is finally following the financials...great! things are more sane now...XLF didn't hit resistance before breaking down but IAT (banking index) did and banks were the ones leading XLF lower. All very technically sound. IAT and XLF got room to drop before support...not a bad time to get in on a short on any intraday strength.


UUP...dollar continues to rally and commodities continue to feel the pain...this trade is not over but many commodity names are nearing channel support, hinting that overnite spikes might occur...good to take profits on some of the shorts but not time to believe that commodities are a buy...


Analysis: i can't believe how much weakness we had in the markets today. Was a beauty for shorts. Commodities can't seem to hold supports and for the 3rd day in a row get hammered. Technically though, commodities might just drop one more day tomorrow, but in such a volatile market, very possible to see a push up tomorrow scaring some shorts. I would take profits on any commodity name thats getting close to channel support. Now would be a good time to diversify the shorts by having them spread out in tech, financials, and retail instead of only commodities. Overall though, with today's huge breakdown, we can't help but stamp a bearish opinion onto the market...Volume and dollar has been key lately...watch them for upcoming trade setups...

Bias: 80/20 bearish ( i am never 100% anything...90% at most)

My Gut Says: gold might bounce tomorrow, dollar might fall, financials will remain weak, and overall the market will look like a pause day. commodities should fall hard but recover during the later part of the day, so get ready to take some profits ahead of the weekend...refiners have a good chance of bouncing up tomorrow and so will nat gas stocks too.

Strength Sectors:

refiners (tso, vlo)
homebuilders
airlines
oversold oil (rrc)
nat gas (apa)

Weakest Sectors:

financials (pnc)
tech (rimm, aapl, intc, jnpr)
pharmaceuticals (ilmn, mygn)
casinos (wynn, penn, lvs)
china (sina, sohu)
exchanges (cme, nyx)
mining and materials (nue, aa)
agriculture (ipi, agu)
solar (wfr)