10/3 - Market Analysis

News:
- house approves bailout bill...signed into law
- WB agrees to WFC buyout, dumps C's bid
- biggest job drop in 5.5 years
- average hourly earnings rose less than expected

Media Says:
- job losses scared investors
- huge selling is partly because of hedge fund redemptions
- because credit markets did not improve after the bailout vote, investors sold off

SPX
- new lows
- no support
- good volume
- triple digit gains turned into triple digit losses after bailout vote


NDX
- new lows
- no support
- good volume
- big intraday gains to end with big losses...sell on the news??


XLF
-unable to hold strong support at last fib retracement
- slight volume spike on selloff
- likely to test year lows


RKH
- gapped up and to prior resistance, then failed and fell
- near the important 50MA yet again


UUP
- another day that closed negative despite climbing to intraday highs
- volume still very light
- bearish diverging oscillators



TED Spreads (spread between gov't lending rates and bank to bank lending rates)
- u see the spike and that is what ppl are worried about
- spike shows that banks aren't lending to banks at good prices
- as with all bubbles, i think this will pop...parabolic is NEVER feasible



Analysis: I would watch the dollar...as it falls and i expect for a nice bounce in commodities, then the rest of the market...but know that its just a relief rally...go i expect to go long early next week, then short the hell out of it after charts such as XME and KOL hit near their 20MA...overall, it looks good to just keep shorting the market...until the short ban is lifted, i don't see much upside for the market...i still believe that the bailout bill will be good for the credit markets but that market will not improve immediately...it will take a while for banks to regrow confidence in other banks...only then, will the credit markets recover...i give it atleast a few weeks to several months...but i don't see the credit market getting much worse than now...overall, watch for a possible bounce next week to reload on shorts...