I think I'll wait until next week before I make any move in this market. The last two days have hurt bulls and bears alike, and who knows whats in store tomorrow on options expiration. Here is an excerpt of my post on the other blog tonight.

Interesting that after two huge days in the markets we are really back to the middle of the recent weeks trading range. I'm really not seeing many of my setups developing which has been thankfully keeping me mostly out of this market. I am still inclined to think that if we break lower here that it will lead to a capitulation low fairly quickly. However, quickly doesn't necessarily mean it won't be steep if it does occur. The markets are so skittish lately, that I wouldn't be surprised at a 5-7% day in an index at this point.Click here for the rest.

Good Trading,


Joey

Stock Chart Analysis BZH

Beazer Homes USA, Inc. (Public, NYSE:BZH)

I'm not too enthusiastic about buying stocks after a 400 point Dow rally in a bear market, but it does look like things will head higher for a while. I don't think we got enough of a wash out to form a longer term low, but there are several indicators pointing to an intermediate term rally. In looking at possible sectors for a long trade, Homebuilders are sticking out as a group to me. Most of them failed to make new lows on this recent move lower in the markets, and in fact they may of set higher lows with bullish divergences on several indicators. Several are close to challenging breakouts, but BZH is looking to me like one that may of already completed a chart pattern breakout. While the clearing of the reverse head and shoulders is negligible, it did close above the neckline and most of the recent volume has been on up days. I don't think I would buy it tomorrow after an 11% move today, but it's worthb stalking for a pullback.

One point to add is this is a possible position trade, because this sector may be bottoming out even if the the bear market has a ways to go. Keep in mind that even though the housing market may still be in trouble, stocks lead the economy and much of what will happen in the future has already been priced in. It may be early, but in general, Homebuilders and Financials tend to bottom while the rest of the markets are still falling, due to the accommodative environment of falling interest rates.

Good Trading,


Joey

for more analysis, check out downtowntrader.com

No charts tonight as I think I will let tomorrow unfold before trying to get into this market.

Here is what I posted in the other blog.

The upcoming week had enough catalysts to shake the markets up, but now we have two HUGE news items on a Sunday night. First, JP Morgan has agreed to buy Bear Sterns for a freaking incredible $2 a share. I couldn't believe it when I saw it. How does a stock go from $150's to $2 in half a year with no criminal activity? There are so many different ways to go.... Read the rest at downtowntrader.com.

Good Luck out there,

Joey