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MARKET WRAP UP 08/20/10
To almost no one’s surprise, today’s options expirations made for a nauseating day, full of whipsaws. After finding a bottom at 1063 by midday, the bulls staged a late day comeback to hold the late July support. Nonetheless, the bears remain in control of the short term initiative. With the S&P 500 closing down 0.37% to 1071, we have more or less come roundtrip since the Monday intraday lows of 1069. Consistent with this lack of progress in either direction, the prevailing mood with traders seems to be one of burnout and frustration.
Despite the apparent lack of progress, we did print a hammer today on the S&P, as well as on many individual daily charts. The updated and annotated daily chart of the S&P 500, seen below, should illustrate this point.
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In this abridged, late summer Friday market wrap up, I will leave you with a chart of the Nasdaq Composite Index. I think the Nazzy more or less sums up the state of the overall market right now. As you can see in the updated chart below, the index bounced from Monday’s key multi-month support, only to be rejected at the 50 day moving average. Today, the bulls once again held the crucial support zone.
However, how much longer can the bulls keep this up? The more times that they probe support, the more likely it is the support will fail. If this support fails next week, I will blow out of all of my longs very quickly. This is not something to be taken lightly. You are talking about a key support zone that will open the floodgates for the bears, should it finally be violated.
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[youtube:http://www.youtube.com/watch?v=TQ008ASeVZ0 450 300]r
Thanks for all the content thisweek; have a great weekend!
chess
i cant believe it is already friday, and the markets are closed tomorrow! thanks for all the guidance this week, and i look forward to reading more of your post soon!
D
Hmm, Looks like inverted H&S to me.
I averaged down on longs Friday… fuck it. Not convinced of sustained upside from here, but I think that the odds favour a short term squeeze. Gonna probably look to short this bounce at higher levels.