Trading is a dynamic and delicated game, if you are out of it just for a few days, you can get dis-oriented real quickly. Today's market is not the same market of yesterday. and that is exactly what I felt today after distriction from my work for the last few days. So, let's get acquianted again.
The market, it seems to me, is indecisive on both sides for the time being. It cannot make mind as whether the worries about the credit market has been fully discounted or the more than 15% knockdown from its high is a enough punitive action. So, the only tool the traders are using are news and TA.
If there are any surprises in any area, that area goes up like crazy. That is what happened to the commodities today, it mainly driven by the news of beef recalls and iron ore price increses. Yes, the commodities are hot (as suggested many times here), but 6% increse in a single day, that is crazy. and that is news driven.
If you look at the chart, today's reverse should not be a total surprise, as a matter fact, the market stopped where it should stop, namely, its 20 days' MA. It has happend since November, any time when DOW/SP 500 apprach close to its 20 days MA, it retreats. This basically meant that there is not enough conviction from Bull sides. If this trend continues, we are due for a few down days from here.
Technology could be an exception. NASDAQ 100 is near its lower boundary of 1739 (it stands now at 1764). hopefully, this extremely negative toward tech will become a savior for the market. Out of 100 stocks. some of following showed strong resilence: teva, qcom, joyg, stld.
Financial is still a drag, all the talks about the worries is about credit market. it is about bond insurance, it is about debt market liquidility etc... unless, financial can right itself, the malaise of the market will last for a while.
Anyways, it is a tough tape to trade long right now, so, be careful
