Once again, the subprime woes dragged down the markets. The day started on a positive note, as GOOG led the charge and made a new all-time high of 534.99 (see GOOG chart from this weekend’s post). Just when SPX and Nasdaq were breaking into more bullish levels (SPX 1500, Nasdaq 2600), things got turned around in the name of subprime mortagage worries.
The major indices held up well, but, attention will likely to be drawn to the key levels. The DOW finished -8.21; SPX -4.82; and Nasdaq -11.88. The financials got hit, as GS and BSC led the slide. The biotechs still couldn’t find room to breath, as BTK closed down 7 more points. Even SOX went down and closed under 500.
SPX
The daily MAs are still trying to sort out their directions, as they bunch up together. Let’s see what happens tomorrow. The picture is still pretty neutral, perhaps with the momentum on the bearish side, at the moment. But, with all this volatility, the momentum can shift in a minute’s notice. We’ll need to watch that 1490 support level for SPX carefully.
Nasdaq
Nasdaq tried breaking above 2600 today, but, wasn’t able to hold it. Internets and telecoms are still among the strongest. This daily chart seems to be neutral with a bullish bias, since the MAs are still in their bullish formation.
We might just be at the bottom of this cycle, as the intraday MFIs of SPX and Nasdaq are bottoming out. With all this volatility, anything can happen. So, be very careful. Perhaps right now, having a little patience could be a really good thing.
Good night and HappyTrading! ™
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3 Comments
BTK - let’s see if it finds support on the 200MA and break the down trend - as it did back in March - otherwise I agree next stop is 750
Happy: I am worried that the folks at PSW (except Phil and a few others) are too bullish. Which is a bearish contrarian indicator to me. The SPX appears to be breaking down now below 50 DMA and testing 1490. SPX could pull back to 1460 or even 1440 and still not break the one year uptrend support. DJI closing on 50 DMA. XLF closing below 200 DMA yesterday and violating 1 yr support trend line today. Even a correction that only goes back to the trendline of the Jul 06/Feb 07 support takes DJI down to 12,680 which is still a long way down from here. Up trend support line is lower still on all of these charts if you look at the 3 yr weekly. Lots of stocks are pulling back already while everyone is focused on the leaders like GOOG and AAPL.
We could trend sideways or even get a rebound rally in the next few weeks, but things look very bearish to me.
What do you think?
Thanks
Greg
Greg,
Since you’re looking at weekly charts, let’s see how the markets do this week and if SPX can successfully test 1490 first. The 3 year trendline (that you’re talking about, I think) was already broken in July 2006. We’re on a different slope all together now. If you’re drawing trendlines for the markets right now, I’d start with July 2006. That’s how I’d do it at least. Don’t forget, we have FOMC on Thursday. So, I’m staying neutral, with a bullish bias towards techs, until I get more signs.
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