I couldn’t think of a good title for this post, so I thought I’d just throw in my prediction for today’s NFC championship. Go Seahawks! <\/p>\n
Friday\u00e2\u20ac\u2122s surprising sell off was reminiscent of an annoying in law that drops by for an unexpected visit. Muddy feet up on the coffee table, half drunk on Pabst blue ribbon shouting expletives at a Jerry Springer rerun loud enough for the neighbors to hear. Just when you think it can\u00e2\u20ac\u2122t get any worse it does. I don\u00e2\u20ac\u2122t think there was a trader out there who wasn\u00e2\u20ac\u2122t surprised by the action on Friday, especially considering the way the market previously bounced back from the poor results released from Intel and Yahoo two days earlier and the subsequent follow through the day after with increasing volume. The continuation of the rally was in place, or so it seemed. Equally disappointing results out of Citigroup and GE proved to be the back breaker on Friday, as doubts about the strength of the economy crept into the minds of investors. Add to that worries over Iran, oil supply disruption in Nigeria, the inverted yield curve and all of a sudden you have a market on shaky ground. Amazing how fast sentiment can change isn\u00e2\u20ac\u2122t it? I suppose that\u00e2\u20ac\u2122s what makes the markets so fascinating. <\/p>\n<\/p>\n<\/p>\n
I think it\u00e2\u20ac\u2122s important to remain even keeled and realize that the market isn\u00e2\u20ac\u2122t as in bad a shape as the drop on Friday would have you believe. Some of that move was surely the result of options expiration which can magnify the move. SOME support remains in place as well. At the same time, the move on Friday should instill some concern and cause for caution. The technical damage done was significant and it can\u00e2\u20ac\u2122t be ignored. I for one had plans of increasingly leveraging with margin provided the healthy consolidation continued. It\u00e2\u20ac\u2122s safe to say my strategy has changed in one day from aggressive buying to a more defensive approach.<\/p>\n<\/p>\n<\/p>\n
So where do we go from here? Nobody can be sure, but looking at the charts of the major indices may provide some clues. <\/p>\n<\/p>\n<\/p>\n
The Nasdaq continues to be the healthiest of the major indices. Important to note is that it closed right at support of the 50 day moving average on Friday and volume came in lighter than the day before, so no distribution for the Nasdaq. More encouraging is that the buy volume during the advance in the first days of January clearly overshadows the amount of sell volume of last week. However, with support at the 50 day moving average on shaky ground, you have to look at where the next level of support may be, which in the case of the Nasdaq lies in the area of 2200. Another 50 point drop.<\/p>\n<\/p>\n<\/p>\n<\/p>\n<\/p>\n
The DOW which sliced through 2 major levels of support on Friday, is another story. The big blue chips have been lagging for years and they lead the decline once again. Look at the difference in buy and sell volume in the Nasdaq and Dow since January 1st<\/sup>. That is quite a difference! The DOW looks mighty sick right here and a drop to around 10550 looks inevitable. <\/p>\n<\/p>\n<\/p>\n<\/p>\n The S&P in terms of price action is following a similar path to the Nasdaq, but with a more bearish tone in its buy\/sell volume. It\u00e2\u20ac\u2122s also right at support of the 50 day moving average. Next level of support is around 1250 if it can\u00e2\u20ac\u2122t hold there. I think it\u00e2\u20ac\u2122s safe to assume we will test that level in the coming days at least for a brief moment. That may happen Monday.<\/p>\n<\/p>\n<\/p><\/p>\n","protected":false},"excerpt":{"rendered":" I couldn’t think of a good title for this post, so I thought I’d just throw in my prediction for today’s NFC championship. Go Seahawks! Friday\u00e2\u20ac\u2122s surprising sell off was reminiscent of an annoying in law that drops by for an unexpected visit. Muddy feet up on the coffee table, half drunk on Pabst blue … Continue reading Seahawks 24 – Carolina 10<\/span>