Pullback continues

Posted by downtowntrader | 3/13/2007 05:31:00 PM | 4 comments »

Well, that was quick. In a recurring theme, the indices gave back all of the 5 day recovery in one fell swoop. The next few days will be very important as the March lows will surely be tested and whether they hold or not will be instrumental in defining what stage the market is in. Are we still in a corrective phase of the bull market, or have we suddenly rolled into an intermediate to long term decline. Theoretically, the indices could continue to decline further into a C wave which could take it as far as the 61.8% retrace of the July to February advance in a regular correction, but how the March lows hold will provide a clue as to the strength of the bears. Here is a chart of the Q's showing the retrace levels and where support may be found next.

NASDAQ 100 Trust Shares (ETF) (Public, NASDAQ:QQQQ)

It looks like the trend will be down to sideways for at least the next day or two, so I am only looking at shorts again. A lot of stocks had breakaway moves today, so there wasn't much to find at value. Here are a few that still offer decent risk reward setups.

Cognos Incorporated (USA) (Public, NASDAQ:COGN)
COGN is starting to get pushed down by the 20sma and looks to have at least one more leg down, possibly to the 200sma area.

Hewlett-Packard Company (Public, NYSE:HPQ)
HPQ rolled over and retraced back up to the breakdown area. It is starting to head back lower and may also find the 200sma as the next stop.

Carter's, Inc. (Public, NYSE:CRI)
CRI is already in a downtrend, and just had a quick pop to resistance. Some of this move was probably short covering and it's in a downtrend until it proves otherwise.

For those that were hurt today, keep in mind no one knows where the markets will go next. Stick to your stops, and maybe hedge your long portfolio with some inverse ETF's. While we may form a near term bottom soon, we may still be in for a rocky ride for a few months if not longer.

Good Luck,



  1. Woodshedder // 11:25 AM  

    Today's action so far is surely nothing for the bulls to write home about. Although I think we are several weeks away from being able to tell if this is anything more than a correctional phase.

  2. downtowntrader // 11:45 AM  

    Yeah, I would agree on both points. I would imagine we would see some weakness this afternoon based on bulls effort so far.


  3. Woodshedder // 4:55 PM  

    Well, whaddaya know, we get a reversal day. I'm going to try and get some charts up tonight. Stop by and take a look if you get a sec.

  4. downtowntrader // 5:07 PM  

    Yeah, this was a possibility I had thought of, but I didn't think it was likely. I had to scramble to cover some shorts early and soften the blows. I also took a daytrade to make up some money and did OK. I think I'm stepping aside until after options expiration. I'll drop by your site later tonight.