Going to bed now. It appears that the foreign markets are in the red, the arbitrage meter has one long red line across it for the ndx meaning the futures are in the tank, oil is forming a V-bottom, Motorola warning huge to the downside. Now what about that employment report at 8:30am. I hope no one went long in any of the naz stocks today. uh oh I am betting the entire foreign market will be in the red by the time I wake up...
Today was in a word WEIRD. Weird in that the NDX surged from yesterdays drop and evertything else was absolutely lackluster with more action on the bid than the ask. Holy Divergence Batman.
It wasnt that weird when you put it in perspective. Every institution has a huge energy trading desk. Most likely a lot of them were long oil going into the new year. They had to liquidate and were probably on margin. In order to cure the margin, they probably had to cover some shorts. As well, many of the stocks were simply "talked up". The analysts came out and started upgrading everything right and left. Im going to say this once, the fundamentals for an advance from here are not present and some of you guys are going to get in hot water. Your going to see some wild days in which you dont understand. You will find your old ways not working anymore as the trends change. All of the investors have left the building. All the cautious investors dont want to participate in this. Now its just a traders market with a bunch of 20 something year olds on 20 inch flat screens. Some of these big money guys will one day just dump a whole lot of stock to cure a margin or cover a whole bunch of shares at once. Someone is going to get hurt. Look at GROW, shares dumped on no news, no events. Nothing. Down 12% for no reason. It will get craziest when the TNX gets to 5 and above. The markets hate the number 5 and its like kryptonite. What happens is that the margin rate ticks up a notch and all that debt on the balance sheets gets that much more expensive to hold...
BTK got a nice boost today. All 15 biotech stocks on my watch list showed green today. GOX down sharply 2nd day in a row. CSCO looking strong. Cant believe I forgot to pick that up in the mid teens not too long ago. Nearly a double now.
GROW down nearly $18 points in a mere two trading days. WOW! Any takers here or do you think we will see $40's tomorrow??
We actually have a battle of two markets. On the one hand, the SPX is in a perfectly tight and smooth uptrending channel, with daily closing pullbacks supported at the rising 20/25dma. On the other hand the COMP has broken down at the faster 20/25dma's, but is being supported at the rising 50dma on a closing basis. Worse is the fact that the NDX had a week of closing prices below its 50dma, before blowing up today. Is the Nasdaq a leading indicator for the overall markets? This uptrend started back in July with the SPX leading the way, so maybe not. The only ammo this market has left is January earnings. Oil prices have dropped significantly for some time now, so those bullets are used up. Interest rates haven't risen in several months, so that clip is also empty, unless the Fed starts cutting. Q4 (2006) and Q1 (2007) earnings and future expectations will have to continue to be meet for this market to continue on its stellar path. If not, expect the SPX to visit its 20 month moving average (like it did twice last year).
Grow is very oversold at the moment. My anaylsis is showing that this 55.44 area is key for the bulls. A good bounce from this area is a high probability. You could get long in here and place a close stop and get at least a move to the local pink R zone. There will most likely be a gap in the futs tomorrow so who knows where this baby is going to open, most likely to the upside though. Any confirmed move below $54 will be major damage to the bulls case and will provide massive headwinds to move higher. Its coming down with a head of steam, best trade would be wait for it to find support in this area and get long on the retest with a tight stop.