I can back that claim with the argument that there wasn’t any panic buying by the shorts (“panic-buying” is a term used when shorts start worrying that the market will turn bullish, so they must buy shares to cover their position).
So what can we get from today? Well, whenever we see fast moving reversals like this, all we get is a sign of “support.” This will be important for the next few days, so watch the new supports and the old supports (the new resistance) in the markets; that should give you a key sign of where we’re headed.
Nasdaq to $2050?
S&P 500: Support at $1250
This is the second time this month that the S&P 500 has bounced of approx. 1250.
Dow Jones: Resistance at $11,000?
As I pointed out yesterday, the Dow just looks ugly. The bearish head-and-shoulder is a big sign of a downtrend. The Dow needs to be comfortably over $11,000 psychological spot. The $11,100 mark looks like a frequent reversal spot. I’m not so sure about the support.
What about Gold?
Gold too is approaching a sensitive spot at $600.00. The U.S. sell off continued into other markets, but at the time I write this (6 am NY), Gold is picking up in London. Still, a 6 month chart shows that the steady calm rise of gold since around March, has topped at $720 and has since been a rough trend down to $600… so far. We can’t forget though that gold is like a “global stock,” that reacts to global events. The dollar gaining strength this week, and a successful attack on Al Qaeda terrorist (which the headlines are calling a “step forward”), are bits of news for investors to feel safe. Feeling safe, means getting away from a gold hedge. Keep an eye on gold, it can fall pretty fast from here. But keep an eye on the news too, because a one time event can cause a one time spike.
[Some Random Trading Ideas]
- “Safe Plays for Uncertain Markets” by Business Week- I believe investors call these protective stocks.
- The demand for Copper could be in trouble. Copper has been on fire due to major demand, especially from China. But now there’s speculation that rising borrowing costs in Asia will trim this demand. [Copper stocks: PCU, CUP, NTO, WIRE]
- Steel Partners submits proposal to acquire Stratos International (STLW) for $7.50; currently, STLW is at $6.00. Get in premarket?
- Evergreen Solar (ESLR) up premarket on upgrade
