Early strength turned into some serious weakness as the day progressed. The rebound in oil combined with renewed Bear Stearns & subprime worries got the blame for the rally petering out. Today was clearly a short-term win for the bears but I still see the market as range-bound on an intermediate-term basis. Let’s see what happens at the June lows.
The bulls are having trouble defending the trusty 50-day moving average on the S&P.
The Nasdaq is one bad day away from breaking its March trendline and its 50-day moving average.
I’ll be watching 820 on the Russell…
Trend Table
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Up |
| Intermediate | Up | Lat | Lat(-) |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
It was all psychlogical today – drill down into the subprime so-called “contagion” and you’ll soon learn it’s a miniscule issue getting an oversized amount of media coverage – a big yet shallow pool.
It’s deja vu all over again, but this time is different. The first time around, we pooh-poohed it because it was characterized as the problems of the “dumb” money – those loan sharks sitting directly at the desks of the sub-prime lending banks. Lots of money has already flowed to save a bunch of those bad boys. Now, we have the “smart” money stumbling and bumbling and slowly but surely revealing how deep the pool really is. Who knows whether this will lead to widescale unwinding of over-leveraged bets. All we know right now is that there are enough people who would rather sell first than take a chance…
Isn’t it always psychological?
Hi Mike,
been a great fan of your site and learnt a lott!!!
This time we will see a breakdown to the other side of the trend line this week….The weekly charts tell a different story!!!..
Best luck…
now ride the bears!!!
Thanks
Vishal.
So “this time is different!” is a cry used by perma-bears, too?
:d