“The market hit the (Short Term – Oversold) condition zone yesterday … so the odds favor a bounce no later than next Wednesday. It is just a question of whether the SPX hits that 846 zone first before a bounce, but either way it will correct to at least the 846 level, and most likely lower than that."
This is from one smart dude. We are now in bounce mode and have gone from oversold to overbought in about 3 hours of trading.
I wanted to go into a few of the games played today to get the markets higher before what should be more selling. Here is a chart of the SPX Futures –
On Sunday night, the SPX was trading below critical support at 866. Then you had an analyst upgrade carpet bombing orgy – Meredith Whitney upgraded Goldman and B of A and everything else that wasn’t named CIT. Tech saw upgrades in Microsoft and Apple and Intel and Novellus…
I didn’t see much for Retail or Energy, but the fuse had been lit for the short squeeze. SPX Futures rallied 2% premarket and opened up a few points. Over the next hour, it got sold pretty hard. Then, at around 11am EDT, out of nowhere, SPX rallied 19 points (2%) in 55 minutes.
The rally was expected, so it didn’t phase me. SPX was Short-Term stretched (2.5 Standard Deviations from the 20-day) (Green Arrow), so a reversal was expected. The reversal was expected to take price back to the Blue Line (20-day EMA), which it basically did in 55 minutes…
Now SPX near overbought (Red Arrow)
Do you see how the Blue Line held as support for price during the entire rally? Do you see how it is now pointing downward? Do you see how price has now rallied into it and failed 3 times? Things have changed – rallies are being sold, rather than pullbacks being bought.
I will look for lower prices until the market proves it can go up again. I will look to buy into obvious support, with tight stops and will look for the major breakout off of this low on what should be humungous volume.
Look At How Easy the Market Are to Move Right Now
Here are the percentage weightings of the largest holdings in the NASDAQ 100 (QQQQ) and how they traded today –
I notice a couple of things –
Apple, Qualcomm, Microsoft and Google are now 20% of the NASDAQ, so just ramp them and forget about the rest of the stocks if you want to move the Index higher.
RIMM is toast. It barely made it back to even today. You can always identify weakness on a strong day and RIMM sucked today. I am also no weary of Oracle and Cisco.
Apple now represents 13.60% of the NASDAQ 100 ETF (QQQQ)? Are you kidding me? Talk about “over-owned” and “over-loved”! I know what I want to short come NASDAQ 100 rebalancing time near Year End…
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