Today was a surprise to everyone, me included. Yesterday I was wringing my hands that maybe the economy wasn't so bad after all. Maybe there wasn't a recession. Maybe there was just a slowdown in growth that was going to be shaken off and replaced with unprecedented movement higher. I was getting jittery.
This morning's shocking jobs report set my mind at ease. The largest jump in unemployment in 33 years. The permabulls on CNBC were desperately trying to spin the news, but to no avail – – stock indexes plunged across the board. The only green on the screen was gold, which shot higher due to the U.S. dollar taking another drubbing.
My favorite aspect of the day was that in spite of crude oil's ungodly rise today – – not just a record new high, but a record one-day movement upward – – oil stocks fell! The OIH was down. Commodity stocks were down. Solar was down. It was beautiful! If these stocks can't go up on a day that oil spikes over $10 a barrel, don't you think the bloom is off the rose?
Here is an intraday minute bar graph of the S&P 500. Pretty nice looking head and shoulder there, isn't it? If I've drawn this correctly, it would project a target of about 1,300. The next major Fibonacci is lower than that – 1,270.
The $NDX finally – finally!!! – broke its ascending channel today. Good.
On a daily graph, you can see the S&P 500 potential more clearly. There's a clean 100 points between current levels and the next Fibonacci, which is where we've had two bottoms so far in 2008 (one in January, one in March). That is major, major support.
Looking at the Dow, the next level down is about 11,500. Not that far away, when you consider it is 700 points, and today alone the Dow dropped 400.
China is looking weak again. My FXI puts are doing nicely.
And yesterday's price bar for the $COMPQ was just death-defying. It came within a cat's whisker of pushing past resistance, but it didn't happen. Today prices fell away swiftly from this level.
I've back up ten years for the graph below, just to show how battered banks are getting.
Just a few equities tonight………AutoZone (AZO) is making some good movements within its diamond pattern; a break below 119 is essential at this point for something really bearish.
XEC is just one example of an energy stock which fell on a hugely bullish energy day.
Lastly, Sears is a new holding for me. I am pushing myself to short (or buy puts on) battered stocks instead of high fliers. That may sound really elementary, but for me, it's a change.
Setting Thursday aside, this was a dynamite week. Monday should, of course, be fascinating. Will it be a Black Monday, or will it be a Bounce? I have no idea. I've lightened up on my index puts to some degree, but I'm still very much positioned for more downward movement. Have a good weekend, everyone.
