Wednesday, August 5, 2009

Was today the IT top?

Today opened up and immediately lost ground as sellers overwhelmed the buyers. Then once again buyers stepped in and started to bring the market back nearly to the previous highs. I've repeatedly brought up the fibonacci turn date was last week (+/- one week), so that is still on the table. The nasdaq has already been showing relative weakness and that is a big danger sign for the bulls. The financials, however, held very strong today, so it will be interesting to see if we get some additional upside tomorrow and Friday. I'll be watching today's lows with interest because a confirmed break of those lows should send the indices to an even bigger selloff. The wildcards will be the market's reaction to the unemployment report out due this Friday. Today's private sector report shouldn't be too encouraging to the bulls.

One other thing was encouraging to the bears is that the move off of today's lows was a near perfect .786 retracement off of the 24hour market. Selling came in hard at that level with a lot of volume to boot. In addition, no one was willing to ramp up prices into the close like so many have beforehand. I did dip my toes in the water with some FAZ purchases and some Aug 14 puts (avg price .42), but I'll be looking to add to that position Thursday and Friday depending on what I see as one more nominal high is still possible (see chart below).


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