Looks like a big test today for the Standard & Poor’s 500 index and for U.S. stocks in general.
Today straight out of the gate the index broke below the 1100 level where, over the last few days, it looked like the index was trying to stabilize. (See my post from yesterday, May 19, https://jubakpicks.com/2010/05/19/could-the-sp-500-be-finding-support-near-todays-todays-low/ ) The 1100 level represents the index’s 200-day moving average, a major support level.
In today’s trading the index dropped like a stone to 1088 by 9:40 ET. It has rallied slightly since then but still stands below the 1100 level.
Watch to see where the index closes today.
A break below the 200-day moving average would probably lead the index to fall to its next level of support at 1040, a decline of about 5% from here.
A close above 1100 today would add strength to idea that the market is trying to stabilize—I the short run—at that level.
Stay tuned.
ronnieled…
Ed posted a few of what he bought this week such as DZZ, SDOW, and a few others. Trust me, I’ve watched these and they have definitely been making money! SDOW made $7.22 just during trading today!
Ed:
In all seriousness, why don’t you post your trades right after you make then so we know if you are brilliant or full of it.
I stand corrected. It was the Swiss riding in to rescue the euro today:
http://preview.bloomberg.com/news/2010-05-20/euro-declines-amid-concern-europe-divided-on-how-to-contain-debt-turmoil.html
If countries keep propping up the euro, eventually gold will return as a solid play.
Actually, since I haven’t seen any kind of confirmation yet in the business media, I suspect the euro’s rise is more of a reflection of temporary dollar weakness, based on bad economic news today. But since tomorrow is another day, EUO is still a good play.
However, I think the euro’s ride down from here will be much slower. We’re getting headwinds from central banks outside Europe trying to fight the inevitable euro decline.
EUO entry point: for a seasoned professional trader, probably Dec. 1 or so…2009. Or maybe when it gets back to that level.
Cocktails, anyone? Roll them bones…
UPL getting close to 5/7 lows.
Did Swiss National Bank buy euros again and cause euro to rally?
Will S&P close below 1100?
The Eurozone leadership is looking like Keystone Cops right now so, if you don’t mind going long, anywhere in here is probably an OK entry point for investing against the euro.
When is a good entry point for EUO? Any thoughts?
EUO just took a dive.
bobisgreen:
yep- the Secular Bear, and the Big Bearmarket Rally. BMRs have to end sometime, and now may be as good a sometime as any.
The reversals come quite quickly [look at Sept/Oct 2008 and Feb/Mar 2009 slides]. I admit that I am on the side of the group that is waiting for the New Bear to take out the old lows, not just bust the “support levels”. Doubt if we will see that today, maybe not this year, but sooner or later.
Having said all this, I admit I too am watching for “selective opportunities” [well put!]. That is what limit buy orders are for- getting a screaming On Sale deal.
nukeage,
I like it: The TD Indicator! 🙂
Tom,
Not even you can ruin my good mood today. Have a great day buddy! 🙂
Well, this is crazy. I’ve been trying to log on to my TD Ameritrade account and their computer seems down. I called their customer service number and guess what it says: “Due to high volume, we are unable to answer your call. Please try again later.” If that’s not bad, I don’t know what is.
cjxland,
Just for the record, we’re still in a bear market (secular, or what ever you want to call it). Thankful, of course, for the rally since 3/9/09, mindful also that we’re not out of the woods here at home or globally, selective opportunities are ripe now for picking.
Tom, are you picking at Ed for his bearishness? Bears become bulls…at the right moment. Bulls become bears…at the right moment, especially after the market delivers a bloody nose.
Watch out that last month was a bear market rally top. I had broker friends who were advising clients to buy financials at “great bargain prices” in 2008 until the clients must have been broke or gone or the companies bankrupt or on life support. In a typical crash chart, the market dives like 2008 early 2009, bounces strongly as in the past year plus, then has a very long prolonged second downwave that can take out the initial crash low and continues until no one wants to be in stocks at all again ever. I don’t know that that’s what’s happening now, but it’s clear as far as I’m concerned that: 1) the problems that caused the crash were never addressed at all 2) investors got way to bullish way too fast given the fact that we all saw the global financial system almost breakdown completely 1 1/2 years ago. Real risk is out there right now, in my opinion.
tanerb
“Is it a good time to buy or not?”
I’ll just say it: maybe. [And that is a qualified maybe… ;]
Perhaps a better way to look at it is- Is it a good PRICE to buy, or not?
STL- Mr. Jubak has an excellent tutorial on technical analysis in his book. Worth the price of admission just for that chapter alone… but there is so much more that you need there.
EdMcGon,
You’re the smartest person you know. I’m sure you’ll go long at just the right time and we can all celebrate your wisdom then again.
tanerb,
No.
guys, just say it. is it good time to buy or not?
Seaturtlelady
The terms you are mentioning , “support levels”, etc., come from study of the charts of prior stock prices and making inferences based on how they look. It is not 100% accurate (an imperfect analogy would be driving while looking in the rearview mirror) but it gives you something else to hang on to in the turbulent world of market fluctuations. A “support level” is determined by looking at a chart of a stock’s price history and seeing a relatively flat level of stock pricing. The assumption is then made that there is a group of stockholders at this price level that will provide “support” for the stock’s price at that level because they don’t want to lose money on the shares they are holding. Charting can get a little complicated and, if you really want to understand and use it, you will have to get some training. Good luck.
bobisgreen…
Thanks a bunch for the tutorial link!
S&P is down about 10% from its’ April 17 recovery high 1217, but still above its early Feb. correction low 1066. Given the fast run last year from its 10 year low 666, this should be an expected correction so far. I am hang on.
bobisgreen
Stages of a bear market:
Denial [see first comment above]; migration [acceptance]; panic [capitulation]
And, as Mr. Harrison on the other channel says, HOPE is not a valid investment- or trading- strategy.
I’m not saying this is the bear market, but we never really did solve the problems that caused the last one, and things are definitely not as rosy as we are being led to believe, if you look into the numbers just a bit.
And stock markets are notorious leading indicators, not trailers.
Take Mr. Domino’s suggestion: relax, step back, and enjoy the show [acceptance]. And- nibble if the price gets right…
Leading economic indicators down 0.1%:
http://finance.yahoo.com/news/Leading-indicators-slip-01-apf-251256909.html?x=0
Time for the “Running of the Bears”! 🙂
sigli,
Opinions…overbought? they’ve dropped so fast. I’m hoping (betting) the rocks are made of rubber…we’ll get a bounce…a good one…I hope! One thing is for sure, lots of bargains out there now!
@bobisgreen,
What about the currently high valuations? Overbought is overbought. The volatile path down may be insane, but returning to better value levels isn’t, IMO anyway.
I believe the market will stabilize after ‘option’ day!
Seaturtlelady,
One position of mine sold because of a “stop” I set to prevent an oversize loss. Please see this article for a good explanation of support and resistance. http://www.investopedia.com/articles/technical/061801.asp
As Jim Cramer said the other day (and Sigourney Weaver said over 20 years ago): “There is no Dana…there is only Zul.”
BEARS RULE! 🙂
bobisgreen…
Curious if you’ve sold off even though you think this is nonsense and/or unjustifiable??
Also, could you explain this comment…”A break below the 200-day moving average would probably lead the index to fall to its next level of support at 1040, a decline of about 5% from here.” What does Jim mean by level of support?? Is this about us buying stocks enough to keep the stock market level??
This market is behaving just like it did in late 2008. It would be down 3%-4%, then by the end of the day, be up. Don’t you remember the huge 700 point swings in the DJIA? So, it wouldn’t surprise me for us to close in the green today. My advise..step aside and enjoy the show, and buy a little more.
Thursday AM: To those who control this sell-off as of late: News flash: THEY’RE ON DRUGS; CERTIFIALBY INSANE!!! There’s NO way you can justify this kind of nonsense! It is what it is, but sorry, not justifiable…2008 was justifiable with all it’s horrible documentation to support massive running to the hills…this, NOPE.