A Wild Ride

Traders may find it extremely difficult to trade this market against the backdrop of this election, which is unlike anything this country has experienced before. What makes it so difficult is that you are not acting with all the information. Therefore, be extremely cautious and choose your levels and areas wisely.

S&Ps are at 1391.50 down 1180. There is a big neutral zone between 1395 and 1416. We are opening up underneath that neutral zone. We have a key area at 1388, then 1386.50, 1385, 1380.50 and yesteray’s limit down at 1378.30. Under that, we have levels at 1377 and 1372.50.

On the upside, we’re looking at 1395, 1397.50, 1400, 1401.50, 1405, 1407, a major area at 1410 and then 1412.50. To break out of this netural zone, we have to get above 1416. We think 1395 to 1398 may be difficult to get through this morning, given some stock downgrades and continued election uncertainty.

The NASDAQ was trading down 90 at 2968. Limit down is 2963. Yesterday’s low was 2940. The market spent very little time trading below 2980 yesterday.

The key thing is simply levels and prices really are not going to matter on days like yesterday, when the news came out that the Democrats would challenge the election in court. Basically, if there is a resolution, or if Gore accepts that Florida is going to Bush, we think there could be a massive spike rally.

Especially in a market like the NASDAQ, you have to take into account a couple of things. Yesterday was somewhat of a contained session as we settled almost unchanged.

Then this morning, INTC and DELL were downgraded after poor conference calls following earnings. The key to today will be if the INTC news is company-specific or if it’s sector-specific.

If you watch the rest of the semiconductor stocks turn around add move higher, then the NASDAQ will find support and trade through yesterday’s high of 3100. If this is used as another reason to sell, we think there is an excellent chance of taking out the year low in cash at 2897.50.

The Dow made a nice bounce off the lows yesterday. It bounced by a total of 184 points from the bottom. We wanted to be a buyer in the cash between 10,700 and 10,500. Yesterday’s low was 10,618, and we settled at 10,834.

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