Bears’ Day In The Sun
Now
that my car has been fixed (new battery), I am now at the office at
my normal time and able to embellish a bit more on my commentary.
Yesterday the bears had their day in the sun as the major indices closed
below the resistance levels, 1223 and 1757, which they worked so hard to get
above last week. This should make trading
interesting on the opening, but ahead of tomorrow’s speech by Greenspan, I
expect the afternoon to be a yawn, as it was yesterday.
A look at the S&P five-minute chart below
will indicate areas where the market did absolutely nothing (circled areas).
Notice too, that the 20-period moving average at the same time was
sideways, another indication that a whole lot of nothin’ was going on.
The better approach was to wait for that range to be broken and then
trade in the direction of the trend. In
fact, I had a humorous exchange with a TM subscriber in TradersWire
yesterday talking about sitting on your hands when nothing is going on.
Her response was: “My hands are sore from so much sitting.” Well
said, Megan$. This morning should
provide plenty of activity for your hands on the keyboard.
Bear in mind we are in the
midst of options expiration week, traditionally an erratic time in terms of
“bizarre†price action, as options positions get unwound.
Don’t be surprised if you are scratching your head over the next few
sessions.Â
A quick look at a 15-minute
chart will illustrate some critical levels for the major indices. The Dow at
10,458 is a 40% retracement off the recent July 12-16 high/low, the spooze must
close above 1211, a 50% retracement of the same time frame, while the Nasdaq has
broken through its’ retracements for the same time frame.
As of this morning, the futures are off a bit and key support on the
spooze is seen at 1190, a 60% retracement of the March—May move. A close below
this number could set the stage for re-testing contract lows.
The Nasdaq has the same support at 1677 (60% retracement).
I will be looking to sell into
rallies assuming we open lower as indicated currently.
The support numbers above will offer tremendous setups as the market
gyrates and decides which side it will ultimately go toward.yes”> Also, be careful in the afternoon, as I suspect trading may dry up
ahead of Greenspan and Intel
(
INTC |
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PowerRating) earnings.
If the market continues to get
comments from CEOs like Jim Morgan of Applied Materials
(
AMAT |
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PowerRating), who
have finally succumbed to the fact that business will NOT be turning around
anytime soon, we will certainly make a run towards lower levels.
If the semiconductor market were truly turning around, you would expect
it to be reflected ahead of time in countries like Taiwan. Yet a peek at the
daily chart of the Taiwan Fund (TWF) shows quite clearly that no recovery
is in sight. That being said, look for
chip stocks to be weak, compounded with those brilliant analyst downgrades of
several of the groups leaders.
Staying with the economic
theme, I read a good piece on the auto industry in Forbes last night.
If General Motors’
(
GM |
Quote |
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PowerRating) new buyer incentive plan is any
indication of consumer demand, look out. It
goes something like this: “GM is
telling its lease customers that if their vehicle leases expire anytime between
September 1, 2001 and March 31, 2002, they’re off the hook for the remaining
monthly payments — excluding charges for excess miles and damage — if they
trade now.â€Â Wow. Yet GM’s chart
looks though they are selling more cars than ever.As always, feel free to send me
your comments and questions, davef@tradingmarkets.com.
Dave
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