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MARKET WRAP UP 08/12/10
After yesterday’s bloodbath, today featured another win for the bears, albeit a muted one. With the S&P 500 closing down 0.54% to 1083, we are now back below the 50 day moving average, as that reference point served as resistance today. Above all else, however, today marked an indecisive doji day–a pause, if you will. I expect tomorrow to be a big move, and based on The PPT and its breathtaking historical accuracy, there is a good chance that move will be higher.
If we do, indeed, see a sharp gap higher tomorrow, the S&P could be looking at a three day bullish reversal pattern, known as an abandoned baby or morning star doji. These types of reversal patterns are rare, yet also highly reliable when they do occur. Of course, this is all theoretical at this point. Presuming a reversal is always a dangerous game to play with Mr. Market. However, it is something to keep in mind, should we rally.
As the updated and annotated daily chart of the S&P 500 illustrates below, after yesterday’s big marubozu candle down, today was a much more benign selloff.
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Updating some key daily charts of the major indices and sectors, the Dow Jones Transportation Average printed a bullish reversal hammer candlestick today. As always with hammers, we will need to see confirmation to the upside before we get cocky.
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Continuing with an ongoing theme, the Nasdaq Composite and Russell 2000 (small caps) are relative underperformers, while the emerging markets ETF is by far the best major chart that I see.
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The financials held in tough today, and the bulls defended the $14 level with vigor.
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As for my portfolio, I added more to $ISLN, and bought $LCAPA today. I like both charts, as they have been outperformers since April. If the market bounces back here, I want to be in the leaders who are “flying the friendly skies,” above all of their major moving averages.
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TOTAL PORTFOLIO
EQUITIES: 40%
- LONG: 40% ($LCAPA $BZ $OVTI $ISLN $RDWR $CMI)
OTHER INSTRUMENTS: 8%
- $TBT
CASH: 52%
You boss shall fabricate a blanket of testicle hairs because you say the market goes up.
Hear ye Hear ye
The Fly is a Bearshitter and shall hence forsth be known as The BS.
You are aware he went long today and sold out from his heavy shorts, right?
Ha! great title, it remided me of the line from “Clerks” spoken by Randall:
“”Chicks with di@cks that put mine to shame”
Do you play chess, sorry but I am a new reader. Ever heard of the Barcza opening as white?
I prefer Danish opening for white.
I am a modern opening and defense fan and thus get my butt handed to me more often than not.. What can you do? I can play a nasty scheveningen defense though.
Nice–I recommend books by Bruce Pandolfini and Jude Acers, who I know personally and is a great teacher.
The Eddy Murphy pictures with the Tranny headlines never fail to amuse me. That will just never get old. 🙂 Thanks for yet another stellar post.
heheh i did it for you Kenai 😉
What they said. Except for the first guy. Thanks.
Thanks Yogs.
So far, SO GOOD
Was waiting for the 8:30 push from Asia
EURO/JPY getting a boost
We’re off to the races
Yup, curious to see Yen weaken here.
Re: the abandoned baby and the hammer formation on the SnP and the trannies, don’t those candlesticks really need to occur after extended down trends to be looked at as reversal formations? Thanks in advance for the clarification.
Good point, appreciate the feedback.
The answer is not always. In this case, even though we did have not a steep prior downtrend, we still have several days in the red–6 or 7 out of 10. We then had a huge red candle, followed by a doji that gapped well below the previous day’s candle. We have not seen that type of breakaway gap down after a marubozu throughout this correction, so it bears watching for a reversal.
Great, thanks! I dumped my TZA and VXX today for safekeeping but am not ready to get long yet. Like you say, it “bears” watching. Thanks for the blog and thanks for the response.
Been reading since you got your space, but haven’t posted any comments until now. Just wanted to say thanks for sharing your thought process on the markets, charts, and stocks !! Your time and effort is certainly beneficial to many here.
Thanks, G. I really appreciate that.
something tells me the “trannies with hammers” and “abandoned baby” theses may not translate well with my clients! good stuff
Bought more UWM (now 5% cash, 20% DAG, and 75% UWM).
Just read this one on ISLN (http://www.gurufocus.com/news.php?id=104222):
“President & CEO of Isilon Systems Inc. (ISLN) Sujal M Patel sells 24,000 shares of ISLN on 08/11/2010 at an average price of $17.15 a share.”
Might be the reason for price drop?