The Insightful Trader

A Needed Day

by on Mar.15, 2009, under Market Commentary

We had a needed day Friday. Some expected selling  thru the morning,  and then a nice steady build throughout the rest of the day. A lot more of a mixed market today however as tech was mixed though the semis did ok, MSFT was still a drag. Financials were mixed with the brokers acting well but most everything else pretty mixed, a few up and a few down. Oils and coal stocks pulled back slightly overall, while precious metal stocks were all slightly up.

You would have thought the weakness in the other energy stocks would have transferred to the solar stocks as usual, but instead most had a decent day led by FSLR which finished the day up about 3points to cap a spectacular, nearly 25point move, this week. The Ag stocks were slightly down on the day. So a very mixed bag today but not bad for a Friday the 13th.

I’m still optimistic for the next few months as were way oversold on a historic basis and of course all the pundits who last week were calling for new bottoms much lower are all bullish now. However, realize that I look for this to be a choppy ride with some backing and filling along the way. We’re still in a major, perhaps long term down trend and until proven otherwise, this is a bear market rally. As promised, here is a one year daily chart with the fib lines drawn in going all the way back to the high in Oct 2007. 

I realize its hard to see this big of a time frame on such a small chart so here are the key levels. Our first major resistance is going to come here shortly, at the 800 level as we have both horizontal and a down trend line in that area. The first fib resistance comes in around the 880ish area, and then after that the 38% fib comes in around 1015. At some point before then we’re going to run into the critical 200ma before we hit there. So for the relative near term, getting back over the 800 level will be enough, though I have a sneaky suspicion it may take us a couple of tries if it can even do it but let’s hope. Even a few good months would perhaps help the psyche of the country.

 Hard to believe its been 18 months already since the market started rolling over. Of course the problem is that 80% of the selloff has come in the past 9 months. The continued worldwide slowdown doesn’t portend well for companies earnings this year and their is much debate over what the real P/E of the S&P is and will be this year, not to mention where real bottoms are made. All I can tell you is watch the charts, unlike companies or CEOs they don’t lie.


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