Wednesday, July 07, 2010

Market outlook for July 7th

Ok, so yesterday we went like a yo-yo, up and down and up again. Volatility is on the rise.The Put to Call ratio has stayed in the range of 0.98 to 1.26 in intraday moves. I think on a larger scale this will continue. The chart of the Intraday yesterday shows we formed a "W" pattern near the close which was slanted down. That infers that this market will go down this morning starting at least below the 9869 level of the low yesterday. Futures are pointing in that direction so we will have to see it unfold. We have broken below the Dow 9800 Support level for 3 consecutive trading days and not gone above this 9,800 support level, so we have begun our decline, drip, drip drip!

UPDATE 11:15am PST

Well as you can see I am surprised that we had this rally today. No real good reason for it but the Longs are very happy they have it as they were getting depressed. I have posted above the Intraday as I usually do but also have posted a 2 month chart of the Dow to show you again we have formed a "W" pattern and it is slanting lower. It doesn't mean we can't go up a day or a few days, but the inevitable is already baked in here, in my opinion. These are days to decide what on the Short side you want to own or what profits to take. I hope you are all doing that. I am adding to a few positions today on the Option side. One piece of data of particular interest is that the Volume is less than yesterday and that is always a cautionary move and one to have with suspicion as to the move's validity. Stay awake out there.

Update: 5:00pm PST

The market is closed and has been for a few hours before I got to posting this. But it was a barn burner today with the Dow rising about 275 points to close at 10,018. The Nasdaq closed up 65 points to 2159 and the S&P 500 closed up 32 points to 1060. To say I wasn't surprised would be a lie. I was as surprised as many. Also the volume actually surged in the last hour to close higher than yesterday's volume. That was impressive and deserves my respect and caution. The 200 Day Moving Average crosses the axis at 10,380 while the 50 day Moving average crosses the axis at 10,350. As these keep dropping it will be more difficult to go above these levels as they will provide resistance. I do not believe this rally will go over 10,350, which will keep the "lower high than previous high" in tact. With the Fed and the Government with plenty of money to manipulate the market, and summer volume diminished, it will be easy for them to achieve their goal of keeping prices from dropping too low for the politics of the season.

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Anonymous Anonymous said...

I have gone to cash some time ago. Do you have any suggestions on where to park the cash or should it just be left liquid to purchase stock once the bottom occurs. I enjoy your blog. thanks

9:34 AM  
Blogger Charles Amico said...

Cash is good, as is U.S. Treasuries. Having some Gold and/or Silver is good as well. Talk to your Financial Advisor as to what he recommends for something with little to no risk.

11:00 AM  

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