Although the Dow was able to end the day right at the closing lows from last week, both the S&P 500 and the Nasdaq finished under even the intraday lows from last Thursday. The action between the bells was downright miserable, and with this fresh technical damage, we’re now looking at the October lows as our next level of support.
As I've been saying, the only way to approach this market right now is by adhering to very short time-frames. Macro-economic considerations and news flow is driving the action, making it impossible to do much of anything with individual stocks – especially the momentum types many like to hunt. A perfect example of the nature of this market late in the afternoon when FNM and FRE announced plans to accelerate their efforts to modify mortgages and stem the rate of foreclosures. When that broke, the shorts hit the eject button and we just about reached positive territory, but then rolled right back over. That was a good chance for a quick trade, but if you didn’t book profits quickly, then those gains probably vanished in the blink of an eye.
At least volume was light again, and we may very well find support at or above the October lows. Chances for technical improvement remain, but as we’ve been saying, there’s absolutely no reason to be going heavily long in a market that has not shown us anything at all. We’re still basing out, and that’s encouraging, but without any leadership or real technical progress, we must continue to respect the primary trend.
I'm looking at great companies whose stocks' have been beaten up, and have rather absurdly high dividend yields right now: drys; fcx; ge; mo.
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