Market Thoughts

Posted by downtowntrader | 12/07/2008 09:03:00 PM | 0 comments »

The markets reversed off their lows Friday confirming the 61.8% retrace of the last swing high as support.

Some of the swings I have seen recently in the leveraged ETFs are insane. SKF for instance had over a 70 point range in ONE day recently.

T2108, the Worden indicator for stocks trading over their 40 day MA's just pushed back over the oversold level of 20%.

It's been well under 20% for the better part of three months, which is the longest since the 1990 bottom and longer then the period surrounding the October 87 crash.

Financials had every opportunity to fall apart late last week, and instead led the markets higher.

The way MOS reversed off it's earnings and guidance and then followed up with a reversal Friday, leads me to believe it is bottoming. The rest of the sector continues to look weak, but then again, so has just about everything.

For those that haven't been paying attention to intermarket relationships, the markets are basically trading inverse to the dollar right now. When money seeks the safety of T-Bills, it isn't going into stocks. Keep an eye on TLT, which happens to be quite extended.

Gold however, has been notably absent from the flight to safety trade.

While I'm shocked at the reversals in Crude and Natural Gas, I've always suspected that market reversals would be magnified now with the sharp increase in hedge funds.

Good Trading,