Monday, June 22, 2009

06/22/09 Market Recap

The stock market tumbled today, after the World Bank estimated that the global economy will shrink 2.9% in 2009. It previously predicted a 1.7% contraction. Declining issues outnumbered advancers by more than a 6-to-1 ratio on the NYSE, where volume was still moderate.

Technically today was a great day for the bears, the S&P broke into new lows continuing the lower high and lower low pattern we also closed below the 50 and 200 dma. I have been bearish for the past week and will remain so until I see reason not to, although I took some profit off the table today. We are approaching a couple of key levels in the S&P, one is the 880 region which we bounced off last time the other is the 23.6% fib retracement from the rally up since March. But if we do successfully break/close below those levels 800 will be the next target.

Nasdaq also looks weak as it closed the gap from last month and closed in last months trading range, here we also see lower lows and lower higs. If we see more weakness I could see a move down to the bottom of last months range around 1360.

It's natural to expect a bounce here and with FOMC coming up there will be plenty of manipulation, I will be selling the bounces until we start to see some higher highs and higher lows in conjunction with closes above important support levels.

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