Friday, March 20, 2009

Soggy Day

Although the troops tried to lift us off the lows of the session as the final hour got under way, their effort failed to pay off, as the indices stumbled into the final bell, closing with average loses of 1.83%. Of course, given the propensity of prices to get pegged close to their strike prices, especially on quadruple witching, it’s hard to read too much into the day’s action. That said, Friday wrapped up just the sort of two-day pullback we needed to see after such a vigorous, if not inevitable, rally off the lows from last Monday.

The big question is if the bulls have enough confidence to step up to the plate and manufacture some support levels in the days ahead. The good news is that the bulls finally have some ammunition. Economic data, while far from inspiring, has been a bit better than expected, and the Fed’s recent action have the potential to provide a boost to the economy in the short-term. You can be sure that we’ll have to deal with the longer-term implications down the road, but at least we’re seeing a real effort to stimulate the economy.

Again, we’ll have to see how things go. Hopefully, the bit of selling that we saw over the past two days will give the bulls an opportunity to put some real money to work, which in turn should help potential leaders emerge and allow for better chart set-ups. In the end, the ball is squarely in the bulls’ court, and they need to prove that they’ve regained some of their confidence.

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