Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Monday, August 30, 2010

It's going to take more than talk

click on above images to enlarge

Friday's feel good rally in the markets gave it all back today because the  black line downhill channel (lower cluster row 2) is still controlling the markets.  We got up against the upper line of this channel around mid day but couldn't break out so the market sold down the rest of the day.  I thickened the lines of the black channel in that chart to emphasize that until we break out of this channel the market is just eating up the money of anyone going long.  I had one reader email me this morning asking if I was discontinuing the late Sunday night scan for trades for the week.  I told him exactly what I am saying here, until we break out of this steep downhill black line channel all the indexes and virtually every stock will get smacked down with each piece of bad economic news that comes across the wire and we are getting those pretty much every day. This is a time to sit tight.
When the markets are trying hard to sell down and the powers that be are trying hard to push it up, the market becomes an intraday trading market only wherein only the people that buy and sell intraday and don't hold overnight are the only ones doing ok in this bipolar disaster they have created.
 Looking at the upper chart cluster, the vix and the bonds both broke out of their channels to the upside giving #2 sell signals just one day after giving #2 buy signals on Friday.  One other thing that is key to watch is in the lower chart cluster row 1 chart 2 - until we see a single daily price bar break up thru the green 10 MA line and close above it, the only thing that is going to happen is that the price bars will start pushing downward from the underside of the green 10 MA line causing a 5/10 downpush and thus another wave down.


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