Sunday, June 07, 2009

Technical Picture - Sell the News

The S&P notched fresh 2009 highs in early trade, on better than expected non-farm jobs data. The enthusiasm was short lived and it turned into "sell the news" as the opening gap was quickly filled and prices fell further, to the next support level. The rest of the day was spent in an increasingly tighter range. That's the second failed BO of the January highs in one week.

As noted previously, we need to close above the January reaction highs and hold in order to declare a new bull market. I want to see this on the weekly chart. Ideally, I'd like to see a bigger right shoulder.

General weakness among commodities came as the Dollar index jumped 1.3% in its best single session advance by percent since January. Gold fell 2%.

The XLF (financial) failed on its first test of the downsloping 200 DMA.

My strategy going into a new week is short commodities on dollar rally. Monitor dollar with the ETF UUP. AGU, for example is developing a bear flag, so I would look to short break of blue trendline with a target of $44.00.

Buy pullbacks in biotech which broke out of a base last week.

Look for weakness in tech which is really stretched at these levels. AAPL and GOOG up 9 consecutive sessions and both carved out spinning tops on Friday.

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