Thursday, November 13, 2008

Another Wild Session, But We've Had So Many The Past Few Months.......What Will Tomorrow Bring? Next Week?

Well, that was certainly a wild trading session. The early part of the day was marked by a general malaise as the major indices hovered around support levels, but once it became apparent that we weren’t going to gain much traction, buyers gave up, and we fell through key technical levels from last month. Once the S&P 500 broke the 840 level, stops were triggered, and a massive wave of selling took us to fresh five-year lows.

However, that seemed to be enough to produce the sort of wash-out that drove out weaker hands and allowed the reflexive rally that has been brewing over the past several days (did the plunge protection team act?). Once the market was able to gain some traction, a real wave of panic buying kicked in, sending the averages sharply higher straight into the close.

When it was all said and done, the indices were able to close with gains of 6.7% on huge volume. From a technical perspective, we have a good set-up for a good bottom, but we need to keep in mind that the only thing this market has proven to us lately is that strength should not be chased. Perhaps that will change this time. Perhaps it is time to think about building long term positions....

Without a doubt, I'm hoping for some lasting positive action as we move forward, but that’s no reason to abandon our discipline; but I'm working on my buy list.

No comments: