Thursday, July 31, 2008


About Shark Watch

Thursday, July 31 - 4:19 PM

Lower than expected Gross Domestic Product numbers and higher than expected weakly unemployment claims got the market off to a poor start this morning, but after two days of big gains some buyers were feeling left out and willing to buy the weakness. That gave us a late morning high, but after drifting around for a while we closed weak as market players contemplated the very important jobs report that is due out in the morning.

Some weakness after a big two day rally is to be expected as traders lock in some quick gains. The key, of course, is that the pullback be contained. The move today was on lighter volume, which is a good sign, but the news tomorrow is going to be important and now that the month of July has ended we have some seasonal weakness working against us.

My theme lately has been lack of market leadership and that continues to be a key issue. The energy and commodity stocks that bounced yesterday after weeks of being beat up couldn’t manage any follow-through at all today and in fact gave back most of the gains. We still have biotechnology leading as deal news drives the group, but we have nothing else showing signs of leadership.

The market is at an important juncture after a good move and some promising technical action. The bulls still have the benefit of the doubt at this point but its precarious and can easily slip away if we don’t see some buying other than the dead cat bounces that have been driving us.

Have a good evening. I’ll see you tomorrow.

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