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MARKET WRAP UP 09/23/10
With the market well on its way to another day of benign consolidation, the bears summoned the intestinal fortitude to push stocks convincingly down during the final hour and twenty minutes of the trading session. After the bulls so valiantly defended the key 1131 level yesterday, they clearly lost it today as the S&P 500 closed down 0.83% to 1124. The recent underperforming areas of the market, which have made me reticent to categorize this rally as a sustained uptrend, looked awful today. Those weak sectors include the financials, transportation stocks, not to mention the huge gap down that we saw in the real estate stocks. Moreover, we saw an abundance of “gravestone doji” candles on many extended charts today, which usually indicates, at a minimum, a short term exhaustion in buying (A gravestone doji is simply a candle denoting indecision, with a clear high in price before making a low near both the open and close).
The key issue right now is whether the bears can successfully press their shorts after today’s breach of 1131. They now have the short-term initiative, and the bulls are back in the familiar role of trying to save the financials from becoming a falling knife that fatally stabs their dreams of a bonafide rally above 1200 on the S&P. The price action today also begs the question of whether Monday’s huge rally was actually a trap to lure in eager bulls. In my view, after the past few days of consolidation, the coming days should give some well-defined answers to whether the bulls or bears will dominate the next big market move.
Regardless, today’s price action forced me to take on some bearish hedges, namely going long the $QID (ultrashort $QQQQ) as a way to exploit any coming weakness in the extended technology names, including $AAPL. My trading philosophy aims to be in touch with what actually is, rather than what I would like to see. To be sure, a sustained rally into 2011 would be fun and relatively easy to trade. After today, however, we are back inside the multi-month trading range on the S&P, and must also contend with weakness in other major sectors and indices.
The bears did more than just growl today, and I am going to respect that fact.
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financials … I think we can rally without them.
ROOOAAAR!
Yes, monster day for the bears and almost a whole % down! Makes me want to cry, almost.
Indices up over 1.5% manana.
@ Baron Kurtz . A rally without the financials I highly doubt. Also I agree with chesswine that we now have to wait again to see real direction.
My indicators reflect a solidly bearish trend. Alas the only indicator holding out from declaring a solid mkt decline is the all-imporatnt UUP; waffling like a mustachioed homo trying to decide between the men and womens’ toilets.
Great headline pic. thx for summry as usual
XLF and /CL – no doubt.
back in the range AGAIN…fml