Market commentary for 02/09/2009
Good day!
NOTE: about next 10 days my site will be at http://www.pop35.com.hr/ I will be there until my official site will back (they said about 10 days). Thank you all for understanding.
The economy continues to struggle. Unemployment was the worse in 35 years, companies like DIS, CSCO, KFT, COST and R are posting and warning of bad results, but Santa is coming and the markets rallied. The financials rallied 6% and the markets rallied 5%. The good news was productivity was up, ISM was up and there was an uptick in the housing market. Hopefully the market is not only buying the rumor and going to sell the news of the stimulus plans.
Friday's continuation was a nice move especially in the financial sector. I have been more defensive and not very active. If this is the start of a trend reversal on the bigger time frame there will be enough time to take that train. On the 60 min charts we can see the indices continued Thursday's direction right after the open and the financial sector was the leader of it. We got another trend day and if you didn’t take trades right after the open then you missed the main move and the later trades were high risk and nothing more than scalp possibilities. On the daily charts we can see the nervous and very whippy action continued. Indices are back to the previous daily highs and are forming possible double top pattern. The SPY has a little room for a Monday morning move up to reach exactly previous high, same is for the DIA, but 200sma 60 min is between. The QQQQ was again strongest and already reached previous high. I said before that for a possible trend reversal, or for future bias, it is always good to look at the bigger time frames and for that I will use weekly charts. We can clearly see the divergence. The DIA is the weakest and despite of the last two days bounce it still looks very weak. The SPY does not look much better. Both are still in the triangle pattern and both are under 10sma resistance area. Maybe we saw a bottom, but the charts don’t give us any signal for that right now. The QQQQ was obviously the strongest and back to upper base line and resistance. It also closed above the 20sma and suggests that we could see buying continuation next week. But something that concerns me is we have strong gains on the daily charts based on nothing or just on hope about the Obama plan. That is nice but all the economic news is bad and that is real and hope about the plan is not real right yet. Until economic news is better I will be very cautious with longs. That does not mean I wont trade it, means that I will use caution fearing possible sharp reversals which is usual in that situations. It will be same for Monday. I will stay defensive and I will watch. That does not mean I won’t take some trades that I like, that means I will trade them with very small risk. If this is the bottom, believe me, we will have enough opportunities to take it. For now, caution is first. Somehow, I believe the real recovery will be when everyone is already out of the stock market and for now I don’t think that we are there. I truly hope I’m wrong.
Good day!
NOTE: about next 10 days my site will be at http://www.pop35.com.hr/ I will be there until my official site will back (they said about 10 days). Thank you all for understanding.
The economy continues to struggle. Unemployment was the worse in 35 years, companies like DIS, CSCO, KFT, COST and R are posting and warning of bad results, but Santa is coming and the markets rallied. The financials rallied 6% and the markets rallied 5%. The good news was productivity was up, ISM was up and there was an uptick in the housing market. Hopefully the market is not only buying the rumor and going to sell the news of the stimulus plans.
Friday's continuation was a nice move especially in the financial sector. I have been more defensive and not very active. If this is the start of a trend reversal on the bigger time frame there will be enough time to take that train. On the 60 min charts we can see the indices continued Thursday's direction right after the open and the financial sector was the leader of it. We got another trend day and if you didn’t take trades right after the open then you missed the main move and the later trades were high risk and nothing more than scalp possibilities. On the daily charts we can see the nervous and very whippy action continued. Indices are back to the previous daily highs and are forming possible double top pattern. The SPY has a little room for a Monday morning move up to reach exactly previous high, same is for the DIA, but 200sma 60 min is between. The QQQQ was again strongest and already reached previous high. I said before that for a possible trend reversal, or for future bias, it is always good to look at the bigger time frames and for that I will use weekly charts. We can clearly see the divergence. The DIA is the weakest and despite of the last two days bounce it still looks very weak. The SPY does not look much better. Both are still in the triangle pattern and both are under 10sma resistance area. Maybe we saw a bottom, but the charts don’t give us any signal for that right now. The QQQQ was obviously the strongest and back to upper base line and resistance. It also closed above the 20sma and suggests that we could see buying continuation next week. But something that concerns me is we have strong gains on the daily charts based on nothing or just on hope about the Obama plan. That is nice but all the economic news is bad and that is real and hope about the plan is not real right yet. Until economic news is better I will be very cautious with longs. That does not mean I wont trade it, means that I will use caution fearing possible sharp reversals which is usual in that situations. It will be same for Monday. I will stay defensive and I will watch. That does not mean I won’t take some trades that I like, that means I will trade them with very small risk. If this is the bottom, believe me, we will have enough opportunities to take it. For now, caution is first. Somehow, I believe the real recovery will be when everyone is already out of the stock market and for now I don’t think that we are there. I truly hope I’m wrong.
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