Saturday, July 4, 2009

Weekend Review (06/29-07/02)

A weak report on job losses in June sent stocks sharply lower Thursday. Declining issues outnumbered advancers by about a 5-to-1 ratio on the NYSE, where volume was extremely light ahead of the holiday weekend.

S&P broke out of the small up-channel it was in and we seem to be back in a down channel on our way to the key 880 level, the inverse h&s failed to breakout and we are seeing more evidence for a break of 880. We are still in a range bound market (930-880) and there is no reason to trade away from it until we get a close outside of the range. There are some potential support levels coming up, the first one is the 200 dma which is currently at 888 which coincides exactly with the first fibonacci level(23.6%) which we bounced off in last weeks sell off. We should see a bounce here as the bulls will do everything they can to keep it from breaking, but if we do get a break of 880 we will see some significant selling come in as there will a lot of stops just under that level. I am cautiosly bearish at the moment looking to see if we hold or break support levels.

Nasdaq is looking bearish as it broke a previous trendline it has been trading in since April, but we are approaching support levels at 1435(previous range highs), 1415 previous lows we bounced up from last week and 1400(23.6% fibonacci level). I remain bearish but lots of opportunities to see some buying come in. On a smaller time frame we can see support at current levels in the 1445 area and if we do get an upmove from here we could see an inverse h&s develope.

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