Tuesday, September 23, 2008

09.23.08 - Walking Down to -61.8%

The market has felt heavy since the morning pop, as we slowly grind towards the -61.8% Fibonnaci retracement from the Friday highs to Thursday lows. Amazing. It seems that it is indeed going to take some resolution on the Hill to turn this tide in the short-term, and the market has the sense that this is now going to be an extended political process, economic recovery aside. Still, I'd be careful of holding too short here.

Here is an interesting article from Quantitative Edges. Dollar is up on the day. Lastly, note how low volume was yesterday and today. With the shorts out of the way, it's readily apparent that this is an [institutional] buyer's strike.

10:55AM PST: We slipped under that retrace line and are headed back to the "zone". Should find support there for now if we get that far.

11:10AM PST: Feels like we are carving a bottom [with the higher highs and lows]. Maybe place stops at the daily lows if you are compelled to chase it on a trade. If you are in for the longer-term... this area continues to look compelling to me.

11:40AM PST: Right back up to that declining trend-line... trend traders will short here... breakout traders will look for a piercing...

11:55AM PST: And, breakout! Let's see if it can hold [add: at that SPY $120 level]. Traders should consider raising stops to preserve gains.

12:55PM PST: Sell programs hit hard in this light volume environment. Hang in there.

CLOSING UPDATE: Nice move up again on the GS/BKR news. Here is a link for the person asking "what the hell" a Fibonacci is. Bottom line, it's one of those technical analysis quirks where elements of nature occasionally get reflected in the aggregate/herd behaviour of the markets.

Never Investment Advice

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