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MARKET WRAP UP 09/07/10
Despite the expectations for a “back to business” type of day, we saw that familiar summer-esque light volume action, as traders are slow to return from vacation and/or are preparing for the Jewish holidays this week. Either way, the S&P 500 gave back some of its gains from last week’s powerful rally to finish today down 1.15% to 1091. Many stocks weakened during the final hour of trading, as the market closed on the lows of the day. However, today was not a complete bloodbath, as some leading stocks held up remarkably well, such as $CMG, $CRM and $NFLX.
Above all else, today was likely the first step in a much needed consolidation after last week’s sharp move from 1039 to 1105. Whether this pullback proves to be an excellent buying opportunity remains to be seen. Seeing as we remain in a defined trading range, caution is probably the best strategy going forward, until the bulls can establish a bonafide higher low above 1040.
The updated and annotated daily chart of the S&P 500, seen below, should illustrate just how tight the range is starting to become. On a short term basis, we could easily fall to roughly 1080 before the bulls will put up a fight.
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Looking at the daily charts of some of the other leading indices and sectors, the market could easily give back more of last week’s gains, yet would still be holding some key support levels. Thus, a cautious and patient approach is probably the best strategy in the immediate future.
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Going forward, the basic idea is that the short term parabolic nature of last week’s rally is in the process of correcting. Trying to ascertain how long and how deep this correction will be is a tricky game to play. According to The PPT, we should see some more sideways or down action in the coming days. Despite the progress that many charts have made over the past few weeks, the bulls still need to arrive to support them, or else they risk giving the initiative back to the bears to take us down to the bottom of the range, yet again.
I appreciate the work.
Thank you sir.
As always. great summaries. Thanks. Still sitting on my longs, eating sandwiches.
CHESS, how would SLAB view affect $TQNT? Thanks.
Not well. They would all go down. Chart still solid.
will you hold on to it or use 7%-8% stop loss in this case?
7-8% stop