Monday Sector Strength
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I don't have much time for market analysis tonight, but I thought it was important to view this spreadsheet of where the indexes are in relation to their moving averages. I've marked the indexes that are below the 80-week in red.
The good news is that the banks, S&L's and other financials have held their current levels for two days. It's is a bullish sign because they won't pulling the general market down. The bad news is that tech, materials, energy and gold are all in sharp declines, and there is probably more to go. But the chances are good that another bottom will be forming soon and another buying opportunity.
However, there's no apparent fear yet for a sustained bottom. I think any bounce here is a shorting opportunity, people buying dips have to very extremely nimble. The daily trend is currently in confirmed downtrend. This sell off has been much more forceful than the ones in Feb and Aug this year.
(Comment this)
I expect the bounce to last a few days to a week, or at least until the major indices retest the 50d MA. That would probably take us to this Friday expiration. If the indices would fail at the 50d early next week, that could be the time to exit longs and go short. I personally would exit all my longs by the end of this coming Friday.
I'm looking for the indices to retest the low made yesterday next week, and if the test is successful, will begin to initiate new long positions. I'm watching for a strong follow through day on good volume after a successful retest.
If yesterday low would be taken out next week then the next support could be the August low. And if that support would be taken out also, then we could be at the beginning of a bear market. However, with the year-end bullish bias, I hope we won't get there. It's easier to go long than short for me, especially taken into account Fed "surprise rate cut". :-)
At least that's my plan. Of course the PPI/CPI/retails data in the next few days, plus options expiration activities could throw a wrench into all this, so I'm ready to change my bias as new data come along.
In any case, I do hope for a year-end rally, however, since this bull market has already been long in the tooth, and with the ever increasing volatility lately I think we are getting closer to the beginning of the end of this bull market. Year-end rally or not, next year could be a whole new ball game.
Thank you for a very informative site, it's certainly one of my favorite blog.
Tom (Comment this)