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MARKET WRAP UP 08/25/10
After yet another weak open, stocks recovered nicely to finish in the green, as the S&P 500 closed up 0.33% to 1055. Across many indices, sectors and individual issues, we saw a variety of bullish reversal candles being printed today. As always, follow through to the upside will be key for the purposes of confirmation. With that said, the updated and annotated daily chart of the S&P 500, seen below, tells the story of 1040 holding as a crucial support level once again, during the morning gap down.
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Updating some key indices and sectors, despite the fact that the weak Nasdaq Composite, Russell 2000, and financial sector ETF broke support at what could have been a potential inverted head and shoulders formation, they printed nice candles today just above their early July lows to present the case for a double bottom. The trannies and emerging markets are in relatively better shape than the other charts here.
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Finally, with all of the talk about how terrible housing is, let us take a look at $LEN. The daily chart, seen below, is a pretty good example of how the market is a discounting mechanism. We can see the steep downtrend since late April. However, within the past two days, there has been the strongest buying volume in months, as the stock looks to have hammered out a bottom and followed through to the upside today. With everyone supremely confident that housing is indicating a double dip/depression, if you had put on some short positions yesterday after that terrible housing data, you got burned.
Nonetheless, it is important to remember that housing could STILL be leading us into a depression. It is the timing of the trade that is important. Based on the chart below, you should ask yourself, is right here, right now, the time to short the homies? Or, better yet, is now the time to give the bulls some room to breathe before trying to short again, given that the past four months have discounted an awful lot of bad news?
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Good title and pic, Chess.
Do you think market has a shot at 1100 or more if we get follow thorugh move tomorow? Like Scott is looking for 1120 at least
My thinking is 1080 first, then if there is nice follow through and there are constructive charts, look at 1100 and 1120. As you know, though, The PPT could throw a wrench in all of that if it shoots up to 3.00 quickly (or 2.95).
yeah PPT is a different story though. The rides are shorter now a days and we stay OB and OS for a longer period. That’s why I have been in 95% cash for last few days except for a couple quick scalps on TNA/TZA. Today I bot some GNK in high 14s though .
S&P 500 kind of looks like an inverted H&S pattern to me. A hold and bounce up from here could potentially allow for a nice long rally after all the head fakes. IMHO
1040…..now you are making fun of me!
Great call on the bounce idea.
“shoots up to 3.00 quickly (or 2.95).”
making more fun? Ok, I will try harder on the obscure:
“220, 221 whatever it takes”
Yep – took my short off on $TPX pretty quick this morning around the LOD after numbers came out – almost went long the homies but bottom fishing like this has NOT been my trade this last couple weeks. Reversals all day everyday seemingly.
Good stuff chess.
1040 will be test again, …and again,…and again, because of all the uncertainty.
Housing market is already in a depression, with no recovery in sight,…that is, until some “bright” minds pass a law that says everyone has to buy a new home, to go along with their requirement for healthcare insurance. Those not wanting to buy a new home will be investigated by the Pelosi Commission.
You have to remember, we are all dealing with the idiots in charge of this sinking ship of a country.
Economic change will only follow political change, because the current politic in power has it all wrong as far as the economy is concerned.
Sold my DAG and used the proceeds to buy DIG. Still holding UWM and 5% cash.