Tuesday, July 06, 2010

Market outlook July 6th

The ISM's Service sector data was released this morning for the previous month. May's data came in at 55.4 and June's is at 53.8, worse than the consensus of 55.0 expected. This seemed not to affect negatively the strong surge of markets this morning as the Dow is up 167 to 9868 this morning. Commentators on CNBC remind people that any number over 50 means that non-manufacturing is growing, albeit at a slower pace than the previous several months, thanks to the chart by Econoday, Inc. above shows.

The market has backed off the highs so far and the Dow is currently at 9833, up 147. A small "W" pattern is observable with the slant downward currently on the Intraday chart. This means we should be going lower in a while. That would mean lower than Dow 9824.

This morning has been a good time to add more TZA Call Options if you wanted as the prices are down about 15%. I will update the Intraday information today as it becomes available and trends discernible.

Update: 8:00am PST

The Intraday chart above shows the "W" pattern slanting downwards so I hope you have either sold so far today or bought your Put Options or TZA Call Options as they will be getting more expensive now today.


As you can see the Dow did go lower as the "W" pattern predicted. Now it has made a stand and may try to go back up. Look for another "W" pattern to emerge but this chart shows where we are right now.

Update: 9:16am PST

As you can see the "W" pattern is slanting upwards so that means up again. Sorry I can't be of more help but today is a roller-coaster day, the kiddies kind. Not too high and not too low but a ride nonetheless. Shorts aren't happy today and my guess the longs aren't either as they have had 9 out of the past 10 days down and they don't know whether they can believe this rally. Don't, it's a temporary break from the negativity of the market for those long the market.

Update: 9:30am PST

It has made a reversal and now down to the lows today. This new "W" pattern is showing the way for the day and it is lower. The full "W" has not emerged but you can guess what it will look like and I have drawn the red line under where I think we are now headed.

Update: 10:50am PST

As the chart above shows we hav e gone lower still and the last full "W" is slanted down. Also we are forming a still lower W pattern that has not yet been completed. So it's a good bet now we could finish negatively today as the Dow now is only up 35 points to 9721.

Update: 11:25am PST

The Dow actually did go negative as did all indexes including the Russell 2000, which TZA tracks inversely. TZA hit a new recent high of over $9.00/share. I can't say how the market will finish but you can see there is another "W" pattern forming. If the second leg is higher than the first it will go up, otherwise the markets will most likely finish negative today. It has had a mighty drop since earlier posts.

Update: 12:10pm PST

This will be my last post for today. Business is calling and I must go. You will notice that there was a formation of another "W" pattern at the end of the chart, but this one is flat. This means that the Dow will stay close to these levels, not going up a lot or down a lot until a new "W" pattern emerges. One thing for sure, the Bulls have had their sails ruffled as the Dow has lost most if not all of the gains it made earlier and then some.

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