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Looking at the Russell 2000 (and, ergo, the IWM), it seems to me we've returned to June 16th. We're in a situation in which:
If we are simply repeating this cycle, what we expect to see next, of course, is a trip back to plunge-land. That would be nice. This morning has been pretty rocky so far; I was stopped out of XLU, FINL, DVN, ANR, FLR, and CMP.
Some of my posts are measured in feet rather than inches. This is going to be a short one, because there's not much new to say.
As a thought experiment, I'm going to take the viewpoint that I'm wrong on the markets and that things are going to go the opposite of how I'm positioned (perish the thought!) I think it's healthy to look at what things would look like it they "went wrong" so you can be prepared.
The S&P is just grinding away at 1265. This is not good. This might form into a base from which a small rally could be launched. This level must break; there's just no two ways about it. It will take, I suppose, a catalyst in the form of one of the economic reports coming out this week to do so.
The story is much the same with the Dow 30. We have been monkeying around below the Fibonacci line, with the exception of last Friday's thrust toward the broken trendline.
Just to keep on the "worst case" theme, the $NDX (and remember, these are intraday charts, not daily) could be interpreted as having made a nice basing pattern which has retraced to the horizontal line, preparing for an upward thrust.
The Russell is somewhat more encouraging. It is plainly below the retracement, and it is making progressively (albeit very small) lower lows.
Lastly, USO could plausibly be preparing for a push higher here, having solidified in the 90-98 range.
There, I am through thoroughly scaring myself. But it is very dangerous to get totally wed to a certain point of view. You never know what form the next government bailout is going to take. And I'll be the first to admit that, given any reason to do so, the investment banks and financials in general are in a position for a big push higher, given how horribly battered they've been.
That's honestly all I have to say at this point. Maybe tomorrow will give us some direction. But some days are just like today – – – just not much to it, and not much to say!
And so, yet again, we are grinding away at about the 1265 level on the S&P 500. To say it's exasperating witnessing the support here is an understatement.
Stocks that are headed for oblivion – – think Enron – – don't go from $90 to $0 in one day. They get there in lurches.
It can be tempting to buy a stock for $5 that used to be $60, thinking how easy it would be for it to pop 25% overnight. It happens all the time. And for a few lucky ones, it can be really profitable.
But I urge you not to do this. The FRE and FNM of the world are very dangerous, and during each of the tinted times shown below, people thought they had nailed the bottom. I imagine most of them sold only when their profits had turned into painful losses.
Hi Everyone,
Not much going on at the moment; this is one of those comment-cleaner posts, mainly. As long as USO stays below 98.54 on this little bounce higher, I'm feeling good about my energy bearishness.
If things remain relatively humdrum through the day, I'll do a post after the close. Thanks for swinging by!
