The bulls gave it a good try this morning, but the bears smacked them back down again. What was an impressive rally, fueled by Iraq war euphoria, ended up being a dud. After all was said and done, the S&P closed below it’s 200 DMA again, and the NASDAQ closed below 1400. All the indices did today was test the gaps left on January 17th and on March 24th. It looks like we’ll have to put in more work at these levels before that overhead resistance gets soaked up. This action confirms how many bulls got trapped by those two vicious gap down openings — those trapped longs are now happy sellers now that they can get out even.
Usually when I see this many bearish candles I’m itching to get short. But not this time. Many of the stocks I see are in solid intermediate term uptrends. Also, my other indicators are not confirming the bearishness of the candles. So I think we’re in for some more sideways action. Earnings season is about to kick off, so that should give us some impetus to get moving. I suspect that the direction will be up, b/c everyone seems to want to dismiss the current economic weakness as Iraq related. Assuming the war will be over shortly, the next couple of quarters should see some improvement in the economy.
