Tuesday, December 23, 2008

12.23.08 - Heading to Retest Monday Lows

After a choppy morning session, we have seen an interrupted decline on worsening Tick and Advance Decline readings. I will be looking for potential support near yesterday's lows, which roughly coincides with today's Support Level 1. Volume is again on the low side and the VIX remains moderate. Most leading sectors are exhibiting high correlation on the downward drift -- many will call this a simple "buyer's strike" ahead of the holiday.

12:05AM PST - Dow is resting above its S1 (right below DIA $84). The Nasdaq 100 (QQQQ) has been showing relative strength, down 'only' 75 basis points.

Close - We have been in a tight range over the last 12 days between roughly SPY $85.20 and $92.50. On one hand, traditional MACD looks like it is hooking to the downside. On the other, volume has been very low, we are now at the bottom of that 12-day range, the seasonal bullish + end-of-month effects should begin to take hold now if they are ever going to, RSI and the S&P Oscillator are extremely oversold, and we have been down five successive days in a row. It's usually inadvisable to take long swings in a bear market, but I will take a small (and consider scaling towards moderate) sized position overnight and into the next week as an over-sold fade.

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