Thursday, March 5, 2009


I am in over 90% cash, so I have no bias toward either side, long or short. The reason is because I see conflicting signals. A good example of a high probability reversal to the upside is GE on a gap up. However, if you look at the XLF, it's obvious that the financial sector will once again drag this market down. Financial volume has been weak for the past three days, which doesn't confirm a sustainable reversal and besides, look at the market carpet below. If you look at GE's volume, combined with oversold indicators, the hammer reversal, and the lower Bollinger bounce, then it's likely that GE will be up. See what I mean?

Instead of holding overnights, I elected to observe the open and see what happens in the first 30 minutes (as always) today. For bounce names, I am looking at the insurers, and possibly some cheapies including, but not limited to, PNX, RDN, FOE, HW, and MIC. It all depends on what happens in the morning for Spiker classification. In the event that we head lower, you might as well hit various financials since they are still the absolute weakest sector in the S&P. We are still in a neutral range (so far) and I'd like to see some quick multi-day decisive action take place.

I want to express caution here as we approach March 2nd's opening gap resistance (which was already tested yesterday). I will focus on the 724-735 zone as overhead resistance. I won't short much unless we breakdown from the flag, but at these levels, it is too dangerous to short in large amounts. It is also dangerous to go considerably long. Personally, I found no reason to trade yesterday (as a primary swing trader), so I watched a movie (
Running Scared), and caught up on reading my first non-financial book in 2009: The Audacity of Hope by the "O-Man". Unfortunately, I cannot trash the book because it was a gift from mom.

We have jobless claims at 8:30AM. The consensus is 650K, with a range of 600K to 676K. The previous actual level was 667K.

Don't forget to try the Free Trend Analysis. It's FREE, so give it a shot!

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