It seems we just finished discussing how there is always news in the direction of resistance/ support (R/S) to break either one. Well, we did actually about 885 SPX just a few days ago and than the FED decision broke that R and today was payback as we crossed 50MA support while sitting around it thanks to an ill timed SP outlook cut on GE. Just when GE didn’t throw a shoe out at the market by reaffirming, someone else throws a stinky shoe and shows GE does carry a ‘big stick’ in respect to the market direction.
Once again with no ‘new catalyst’, the market couldn’t even reach 918 this time (911 high) and it was time for the Bears to declare a victory as in an end to this rally by close. In our view, this GE headline will be forgotten and life will move on very shortly. A bigger nag on the market might have been Washington’s comments on the Auto bailout…oh yeah, remember that one?. Well, this bailout stuff may just be the ‘new catalyst’ on freaky Friday where it’s almost been a given to hear good news the past month. We pointed this out before last Fridays trade and we got a rally early in the morning. In preparation of such an event tomorrow, we don’t look at ‘small break' of support as anything to be very discouraged about just yet, as we have potential positive news flow as a possibility to finish the week above 50MA. Even though support was crossed, it is only natural for sellers/ profit taking to come if we breach those levels. The sellers/ profit takers, of course, as expected all over the ‘recent winners’ , especially in the commodity space as the dollar strengthened and stopped its consecutive days drop. One survivor and maybe an important gauge on the markets health is GS. Fortunately, the breach of support wasn’t extreme as we didn’t close that much below it. Considering, we’ve been in a tight range, we probably have a few supports in different traders eyes, some maybe looking at 885 (held at close) as that was the break point in both directions the past few weeks. Of course, all of this is dependent and could be worthless talk if we get ‘negative news overnight/ pre-market.
Anyways..that’s lead into trading day, it’s very simple. There is no need to discuss any sectors or specific stocks in detail as they will only follow the news flow. A few headlines heading into the day such as the Ag-Chem (IPI, POT) negative or RIMM, ORCL positive reports will hinge on the big picture, most likely.
* Don't freak when you see a very low Oil tomorrow ( in JAN crude), it will be a very high Oil compartively on Monday. It has to do with expirations with FEB crude becoming the new front month.