Market Update ( 7/24/08)

( This is part of my post in a small group this morning.)

SPX and Dow start to retreat from yesterday close because of overbought condition and long due for retreatsment. As I said SPX hit resistance at 1292 which is Fibo 38.1% bounce from 7/15 lows. It could re-test 1250 in a few
days. If SPX can hold above 1250 by day close, it will become new lanch pad to continue rebound start from 7/15. The 1st resistance area is still 1292.

AAPL start drop badly. The excitiment of Steve Job's cancer free news can not last more than one day. It will remain down trend in near term. Any  bounce will be good entry point for short.

LEH start drop again, the congress passed Mortgage Bill can not hold FRE, FNM any longer. Financials will continue fall.

In recent rally from 7/15, we saw most previous losers such as Financials, House Builders, Retailers, all have significant gain in past 6 days. But strong lead sector such as Tech sectors are continue weakening. This is a typical Bear Market Rally. It can not last long.

Because of oil price drop, all commodity sectors such as metal, agr. coal,  gold ming, energy are all weak and continue sizable correction.

The only strong sectors are BIO Tech, Health care and Utilities which are all defensive sectors. The rally is no legs going forward because  lacking of leadership.

Based on above analysis, we should avoid aggrisively build long position. We should wait until the rally fade out, and start establish more short position.  Any long postiion is for trade only and most time should close in one or two days.

Trade Suggestion.
( Omit ...)