Thursday, April 30, 2009

Mini Market Update

Today is proving to be an interesting day.  For anyone who trades individual stocks or who is into candlesticks, I would look at the energy sector for short entry before the close.  Some charts that looked like good bearish formations are XTO, CAM, XLE, COG, OIH, among others.

Also watch QQQQ for a potential shooting star candlestick at the close, and also QID for a high volume hammer candlestick.

This move to new highs for the rally has rattled the bears hard, and I'll admit that I'm uncomfortable currently as far as near term outlook.  One interesting thing today is that Yahoo Finance has a headline today on their news stories saying "Dow 10,000 by the end of the year?"  On March 6th, the day of the bear market low to date, there was a story in the headlines about how even though the market had fallen so much, many analysts were suggesting it could fall farther and they had been wrong all year about calling "a bottom".....thanks for the timely warning.  While I don't put a lot of weight on things like this, these types of Mr. Obvious stories have tended to show up around significant turns.

Now while I think the best bet is still some short-term downside, I think we need to be careful with bearish bets if the market doesn't respond quickly with some downside.  A market that is ignoring typical extreme readings can be a dangerous one.  With the stress test news due out next week, I think short-term traders need to be out of any bearish trades by Friday's close this week or have stops in above this week's highs in the indexes.

On the trading front, I may adjust the limit order for tomorrow depending how the rest of today goes, but expect to be out by tomorrow's close.  For anyone that wants to put a stop in, a stop on BGZ at 42.00 should be "safe" as far as allowing downside into tomorrow without much risk of getting stopped out.


  1. Pete,

    I have been contemplating how non-news type factors might effect the markets. Seems to me that these "subtle" influences could be significant during periods when the dynamics are in an ambivalent state due to pull in both directions.
    Came across a study titled: Good Day Sunshine: Stock Returns and the Weather.
    This line(from the conclusion) really caught my attention; "negative moods tend to stimulate effort at careful analysis, whereas positive moods are associated with less critical and more receptive information processing."

  2. fyi: