Thursday, November 06, 2008

Technical Picture - Distribution

We gapped lower on the open as day two of the corrective phase saw more broad based selling. Each pause, or attempt to rally was thwarted as sellers maintained control throughout the session. As can be seen from the charts we have retraced 62% and are approaching base support. Let's see if the bulls are going to defend support if we get that low.

Tomorrow's jobs data will set the tone for trading. However, the sell-off was, in large part, a reaction to extremely weak ADP number yesterday morning and initial claims today (not to mention hopelessly bad retail sales). When the real jobs numbers come out, we could get a sell the rumor, buy the news type reaction. In other words, after two days of selling, the bad news is priced in already. We'll see.

The USD rallied on overseas rate cuts, (150 basis pts. in the U.K). Gold retraced, no surprise.

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