What To Do Before Thanksgiving
What do you do in an uncertain era, marked by a war on
terrorism after six-week stock-market gains of 20% to 39%, before a long
holiday weekend? You take something off the table! Anything can happen in
the markets and moves that might occur are likely to be exaggerated as
volume thins, trading desks drop to minimal staffs, and Wall Street gets a
jump on the holiday.
Profit-taking ahead of Thanksgiving is what we are
seeing, allowing the multiple down signals from the Market
Bias Indicators Page
to finally kick in. Over the past four days, we have had a critical mass of
three or more signals from the page pointing down, suggesting a correction
in the big market gauges was in store.
Still, since the September lows, the market has not
pulled back for more than three days. And while some healthy backing-and-filling is likely to occur throughout the week, inertia continues to build
in the market, a factor detected by TradingMarkets.com’s futures Momentum-5
List, where the three majors —
December Nasdaq 100
(
NDZ1 |
Quote |
Chart |
News |
PowerRating),
S&P
(
SPZ1 |
Quote |
Chart |
News |
PowerRating), and Dow futures
(
DJZ1 |
Quote |
Chart |
News |
PowerRating) — are filling
out the list. These contracts are highly correlated with the cash indices
and kept in line through arbitrage.
The Dow is down 21 at 9954, the Nasdaq is down 22.89
at 1911.53, and the S&P 500 is down 1 at 1150.06.
While the majority of the sectors are down, oil services
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), +5.58%, and the oil index
(
$XOI.X |
Quote |
Chart |
News |
PowerRating), +3.81%, are
leading the market, on hope Norway, Russia, and Mexico, will work in concert
with OPEC to slash output to drive oil prices higher. The most active nearby
January crude contract
(
CLF2 |
Quote |
Chart |
News |
PowerRating), trading at the New York Mercantile
Exchange, is up .77 at 19.21.
For a classic look at how a stock behaves when big
players decide to support it, have a look at Quest Diagnostic
(
DGX |
Quote |
Chart |
News |
PowerRating) for
a textbook example of institutional support at the 200-day moving average.
Yesterday’s low was at the 200-day line and the stock did four times its
average volume, actually the stock’s best volume in one year. Now, intraday,
we’re seeing follow-through from yesterday’s decision to “hold the
line,” and the stock is closing yesterday’s gap (down opening).
Yesterday’s move was also a Turtle Soup Buy setup and a
“turbo-tails” interim double bottom (where the stock started lower
or traded lower, then closed on its highs). Today’s action triggers a
two-step Pullback From Highs setup to coincide with the multiple patterns at
work. DGX is up 1.09 at 62.52.