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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (48720)	11/9/2012 11:32:12 PM
From: Johnny Canuck	2 Recommendations Read Replies (1) \| Respond to of 69902

It looks like traders were caught off guard due to the huge volume that traded the last 3 days post election. Part of it may due to traders closing position in advance of options expiration next week, but given that there was not even a relief rally due to the uncertainty of the election being out of the way traders are very nervous and look to want to get out of the market till there is great clarity around the fiscal cliff. The fact that the government took the US economy to a fiscal cliff and went slightly over before reversing has trader really nervous. SP500 bouncing at the 200 SMA. A break would set the index up for more accelerated sell so there is not hurry to enter positions on the long side and you should wait for the bounce before entering short positions. DOW broke the 200 SMA yesterday and the index tried to bounce but it did not get back above the 200 SMA and it bounced on low volume. Unless the index clears the 200 SMA to the upside in the next 2 to 3 trading session I expect the selling to continue. DOW transports should bounce in the next day or so at the next support level. The fact the transports never may a higher high with the rally in the other indices was a good indicator of the fundamental weakness in the economy. COMPQ still has some downside before it attempts any strong counter rally. I would expect the dead cat bounce to fail. Dead cat bounce on the financials. We might get 2 to 3 up days on a counter rally before continuing down. Energy sector has shifted sentiment severely to the negative side as selling on the few remain stocks in this sector showing strenght broke today. The break of the 200 SMA verify the shift in sentiment. There are a dead cat bounce today, but the indices need to get above the 200 day SMA in the next few sessions to negate the major sentiment change. It looks like traders move into the safety of gold in reaction to the sell off of the move is exactly the reverse of the major indices. Natural gas still holding on to the support level which ins interesting as the gas producer are getting killed as trader move out of the commodity sector in anticipation of slowe growth ahead in the world economies. We had a series of sell signals on the indices the last few weeks so in theory your stops should have taken you out of positions and you should be sitting on your hands waiting to initiate shorts if you play the market in both directions and be sitting in cash waiting for all the selling to be done. The slight bit of positive news was the increase in orders out of China yesterday. The challenge is that it is hard to tell if the Chinese are trying to talk the market higher or if the numbers can be relied upon.