Sunday, December 14, 2008

Technical Update - Bulls Hang On

The markets extended Thursday's slide in opening action on Friday after talks concerning the auto loan package (bailout) broke off in the senate. The pressure dissipated as the S&P 500 held near support at the 38% Fibonacci retracement of the Nov-Dec recovery rally . Helping to stem the slide were reports that Treasury might be willing to use TARP funds for emergency loans for the auto bailout. A slow/choppy advance continued into midday and after an early afternoon breather the indices edged to minor new highs in late trade to end with modest gains. A relatively quieter week in terms of volume and ATR (average trading range) with choppy action leaving the S&P and Dow little changed The Nasdaq outperformed ending +2% for the week led by Semis (SMH) +10%.

A bullish hammer reversal bar on the daily to end the week. A doji on the weekly doesn't resolve last week's hammer/hanging man stick.

Former support is now resistance on the 15 minute timeframe.

This week is OPEX, so the CBOE put/call ratio will be of interest as the week unfolds. Remember last month we saw put buying accelerate into expirations leading to a breach of multi-year lows.

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