Saturday 13 February 2010 – AMC

Posted by Conrad
February 13, 2010
U.S. Markets Recap – Monday 08 to Friday 12 February, 2010 AMC
Originally Posted by Conrad on Monday 8 February View Post
This week is going to be tough to call as the second week of February is always never consistent. It should be a fairly bullish week considering we have the eve of a three-day weekend on Friday and two of the most historically bullish February days within the week … Technicals and the psychological 10,000 should also provide some upside impetus as the market takes a breather from too much tanking over the last three weeks. Upside should be limited to 10,300 while 10,000 should continue to provide some form of support.

Direction for the week Monday 08 to Friday 12 February 2010; Up

Did I say something about inconsistency?  In spite of a choppy and rather bearish week, we did finish the week with a modest gain. But it is going to get interesting from next week. In preceding Tiger years, the bulls have had it bad. I am going with the analysis that I did at the start of the year which is that it is going to be a volatile and range bound year. So far, the market has been right on track. We’re still down for the year and right on track for a fourth down February since 2007 and the third Down-Jan-Down-Feb since 2008.

DOW JONES INDUSTRIAL AVERAGE ($INDU: CBOT)
10,099.14 -45.05 (-0.44%) Volume: 296,514,677 (+52.47%) Range: 9,983.82 – 10,137.39 (153.57 points)

Originally Posted by Conrad on Friday 12 February 2010 View Post
Now that DOW has stayed above 10,000, it now has to avoid crossing its 20DSMA below the 100DSMA. A break-out of that downside Fan will be a great bonus. Another +100 points and we’ll be looking good.

Friday was actually a rally day … but it was on the wrong side of the border. That Hanging Man is an interesting proposition and gels with the other technicals. DOW sits right under the downside FAN’s 61.8% resistance on a lower high after a lower low. Should that Hanging Man stall the rally, we’re going down again. Where to?

Originally Posted by Conrad on Monday 01 February 2010 View Post
Seeing how February is likely to finish down, it won’t take much for DOW to get down … to 9.730, the scene of my last COP and a vital confluence level for 5 years between 2000 and 2004. More recently, in August and November 2009, this became a key support level.

Thus, this is going to become a critical psychological level with technicians calling 9,750 and 9,650 as critical technical levels. Now that DOW has successfully closed below the 100DSMA in consecutive sessions, the 200DSMA is coming up fast and it is not hard to imagine how the 200DSMA may become the catalyst for this breakdown.

February may be positive for now but we still have 9 days to go including a traditionally bearish expiration week and a February Expiration Friday that has been down 7 out of the last 10 years.

The 200DSMA still looms and the 100/20 crossover is imminent like a bad dream that won’t go away.

NASDAQ COMPOSITE INDEX ($COMPQ.IDX: NASDAQ)
2,183.53 +6.12 (+0.28%)
Volume: 696,578,768 (+16.22%)
Range: 2,151.99 – 2,184.57

S&P 500 INDEX (SPX: CBOE)
1,075.51 -2.96 (-0.27%)
Volume: 3,793,567,200 (+2.80%)
Range: 1,062.97 – 1,077.81

Originally Posted by Conrad on Friday 12 February 2010 View Post
Advancers outpaced Decliners by an average 3.15 to 1 on lower than average volumes (-4.76%) on Thursday (avg +1.13%).

Oops … those lower volume values aren’t very encouraging. The internals weren’t that bad but I would have preferred a better showing from the TRIN. It is interesting to note that although overall volumes were lower than average, the volumes on the benchmark were higher compared to the previous days.

Advancers outpaced Decliners by an average 1.28 to 1 on higher volumes (+0.59%) on Friday (avg -0.14%).

So the day, it would seem, was more bullish than it was bearish. We did get a pre-holiday rally, albeit a very divergent one. The VIX dropped to a six-day low and settled under 23 points. If the bears don’t grab the initiative on next week’s shortened week, this will mean that the market is well and truly confused. Given that volumes are the typical pre-holiday weak levels, it remains to be seen if the bulls are really out of it. The internals don’t really spell a true picture as it was all over the place, especially in the closing hour. One thing remains clear though – the TRIN was bearish all through the day in spite of all the buying to bring the market up.

SUMMARY

I’m glad that week is over. I can’t stand those weeks that are difficult to read because it leaves you with little idea of what to do should things don’t work out when your opinions go out the window. And talk about volatility! I’ll be happy when February is over. 

Originally Posted by Conrad on Monday 8 February View Post
… if I get it wrong, we’re getting down to those 9,730 and 9,620 levels in a hurry and if we do, this will be a catalyst for worst things to come.

Tuesday is a long way away so I’m sticking my neck way out there and calling a down first day of the Metal Tiger. This is the one week in February that’s easy to call as it has a habit of being consistently bearish. Since I didn’t get any signs that the bulls were committed in the past week, I’m giving up hope and shorting everything … NOT! … but I will be bearish and be selling more than buying.

___________________________________________

To all my readers …

Have a Perfect,

Prosperous and Profitable

Year of the Metal Tiger

and may all your trades be great ones!!

And to all the Lovers,

Have a Wonderful

Valentine’s Day!!

From Conrad

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