The retail industry is telling us that times are not only bad but historically bad. JWN, JCP, KSS, ANF, M all of them. BBY lowered and then INTC said its sales and margins were going to suffer and that took DELL, MSFT, HPQ down with them.
Bush continuing his rhetoric and Paulsen saying he is changing how he is going to use the TARP. Then you have to factor in the US auto industry, while there are many jobs that will be lost, just throwing money at them is probably not the solution. For those of you that remember when the government stepped in and helped Chysler in the early 80's they had excellent leadership in Iacocca and three new products, the minivan, the K car and the reintroduction of the convertible. GM, Ford and Chysler today have none of the above. What they have is a 20th century auto company that is way behind its 21st century rivals.
Friday's action was disappointing thinking Thursday we saw a near term bottom. After Friday's action my bias is more and more bearish. Friday started with small gap down and selling pressure just continued into the 20sma 60 min support area. In the room we expected to see a bounce back to highs which happened but the last reversal period brought a large disappointing pullback. The DIA and the SPY gave back all the gains and closed at new lows while the QQQQ closed at morning low. Thursday's buying pace was strong and with high volume suggested a daily bottom, but Friday late pull back pace was even stronger. Every bounce finished with stronger selling pressure which suggests the bear market isn’t done. Monday's open will be important because lately we have seen many strong gaps at the open and if the late Friday sell off will be canceled then all eyes will be on daily 10/20sma but if selling pressure will continue then we will see daily 10/20sma crossover and odds for another weekly selling wave will continue. I will post again monthly charts and on them we can see that the indices have room for another round of selling round to the 2002 year low. Let’s see monthly charts first. If we will draw a line from 2002 low we can see that QQQQ has more room than the DIA and the SPY because have leg higher in early 2003 and that is support area too. If we look at the weekly charts we can see the indices don’t have a lot of room to reach the 2002 low. In that case the indices will reach that support and if that is the bottom the result will be a weekly lower low and with CCI 2d setup. That is the situation that I will watch next week. If 2002 low do not hold then we must go back to 1996 which is the next low on the monthly charts. Everything is open now and we must count on every possible scenario because if we don't hear some good news soon then I wouldn't be surprised if the weekly equal move will work.
I think the news still drives the market and it is hard to remember the last time good news came out. All over the world more and more people are without jobs, euro zone has come into recession, some famous traders (Soros) called for a possible depression, so when we think that is enough then it becomes worse. We just need some optimism just to stop market bleeding. For the near future I will be focused on Monday's action and Monday's open. If the indices will go back to Thursday's low then I think we have good odds for a weekly break down. I don’t think that I need to repeat how risky market is right now.
NOTE: I will miss open at Monday. Have apointment and I will back after few hours.
Wish you all good trading!!!
Kind regards.
Ivica
Kind regards.
Ivica
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