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PATH OF LEAST RESISTANCE
richard
blog
Eek, how many of you went long on Friday? After getting a nice pullback and closing at support on Thursday I was expecting a reversal. I even posted this comment on HAS:
“I’m looking forward to a big up day tomorrow. This consolidation looks pretty bullish, Baidu (BIDU) has a bull flag formation, could easily pop if it breaks out of 300 on heavy volume. We should be set to explode…”
Technically, Friday should’ve been an up day…but with earnings coming out, I should’ve known better that anything could’ve happened. Instead of reversing we followed through to the downside breaking support after poor GE earnings. Here’s a chart of the S&P:
If you’ve been following my posts, this chart should make sense to you. We had a chance to break above 1356, we did not…and because of this, our chances of a short-term bullish run were ruined. We were also unable to hold on to Thursday’s low, that’s when the sellers came in and pushed the market below the 50 day moving average. Unless we get good earnings this week and hold above 1345, testing 1400 is out of the picture. For the time being, the path of least resistance is down!
Richard
richard[at]hedgeagainstspeculation.com
April 14th, 2008 at 9:32 am
Hi Richard,
just want to mention one thing:
No, technically Friday should have not been an up day (as you stated). The markets screamed for a pull-back and Friday they did just what they were supposed to do (yes, GE earnings acted as an additional catalyst). The upside potential was more than just limited…just another opinion…
April 14th, 2008 at 2:05 pm
Yea if you remember thursday was on low volume. This means that it could be some short covering or whatever, but the lack of volume for the move was a pretty bearish signal. Fortunately, this mornings open is also on low volume. It is looking to be a pretty flat and boring day. Its almost as if you can feel the anticipation of the release of some key earnings this week. And there are a couple major companies, several of which are in the Dow, that are releasing this week. Just off the top of my head, there is Citigroup, wachovia, Merck (i think), JP Morgan, and several other big dogs. I think a little rest today is healthy. It could be a sign that this latest down move may be drawing to a close, or a sign of more selling is on the way. I think it will all depend on the earnings release. Hopefully the writedowns are drawing to a close this quarter, and the banks can start pushing back towards positive numbers for this coming quarter.
April 14th, 2008 at 2:17 pm
For the bored trader today, Im planning on doing a post some time tonight/tomorrow. Just a couple of the movers and shakers im going to comment on are CXO, EGOV, and AOC. Check em out if your bored and ill give you my rundown on them later.
April 14th, 2008 at 3:16 pm
Hey, great to see some other opinions, this is what this site is all about, sharing information
I still believe we could’ve bounced off support if we were able to push past 1363. I however bought overnight and took a risk, I also did not consider Thursday’s low volume…for these reasons, I fault myself for taking that risk.
Looking forward to a post from you Dylan
April 15th, 2008 at 10:48 am
Richard, that is exactly the problem!
You believed…
Strong and consistent portfolio performance is not built on hopes, believes and expectations but on facts and knowledge…just something to think about…or not.
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