Sunday, October 25, 2009

Technical Picture - Rally Stalled

The top of the Lehman gap which was tested Wednesday morning, is holding as resistance thus far. Despite some better than whisper number earnings reports from tech heavyweights such as AAPL, AMZN, and MSFT, the Nasdaq can't break resistance.

IBD notes that 6 distribution days for the comp and 8 on the S&P would, in most circumstances kill an uptrend, but they also note that the worst bear market in 120 years doesn't qualify as "most circumstances". We'll soon see.

Couple of trades on the SPY setup.

1. Technical trade on Lehman gap closer. It started off good, but eventually felt like it might fail, until WFC was downgraded late in the session by key bank analyst.
2. Next day buyers stepped in to buy the dip - C&H formed with 3 consecutive NR7s in the handle.

Agchem sector breakout is tenuous.

Transports breach trendline support and could be a leading indicator for the rest of the market.

$USD edges lower but feels ready to retrace anytime.

Meanwhile $CAD coming in for a retest of the base.
Gold still strong and basing, but could falter if $USD pops.

Internet sector still bullish.

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