day_trader's blog

Today was an ugly day but volume was very light.  The details of the government bailout continue to come in and nothing has been approved by congress as of yet.  The market took that news and rising oil prices to allow for a retracement in the market.  While today's move was large, we have not really violated any important support areas; however, the bearish engulfing candlestick today on the Dow was ugly.  I do not have much of an update today.  We just need to watch how this unfolds.  I do not believe that the lows from last week will be taken out.

Last week reminded me of July 2002, Sept 2001, and even October 1987.  The volatility was sky high as evidenced by the $VIX index and we had quite a bit of market moving news that generated multi-percentage moves.  So now that its all said and done with, what can we expect going forward?

Shizophrenia is the word of the week.  There is just alot of action to digest here in the market.  Very interesting times.  Today, Morgan Stanley was in heated talks with Wachovia for a merger.  Washington Mutual is looking for a suitor.  There was a report today that Treasury secretary Paulson is considering an RTC type of entity that was formed back in the 80's to tackle the S&L crisis.  This type of entity would basically absorb bad debt and free up cash for these troubled banks.  Short selling was banned in the UK and naked short selling has now been stopped in the US markets.  Any naked short position must be returned to the broker/dealer before settlement occurs on this security.  Basically, you have about 3 days to

Well, it appears that we were a bit early on our entry to go long with 50% of our anticipated position in this market on yesterday's close, but hindsight is always 20/20.  I want to reiterate that this is a long term position of 9 to 12 months.  Catching the exact bottom is very difficult in a market like this and for this reason I am initiating my

My downside targets have been achieved.  I see a bullish divergence between the banking sector and the broad markets.  This is bullish.  The S&P 500 hit 1169 on todays low and fell within the 1165 to 1182 target zone and put in a reversal of nearly 300 points on the day as I write this. 

Has anyone been trading the coal stocks?  What a ride it has been to the downside.  Since our call of a top on the coal sector, many of these issues have dropped nearly 50% from their highs.  There has been an all out selling spree from that vertical top that was put in nearly 2 and a half months ago

The close today was very telling.  Last night, I mentioned that I wanted to see how this market closed today to make any further conclusions about this market.  The market spoke very loudly today and closed down over 500 on the Dow and almost 60 on the S&P 500.  The waterfall decline that I was

Its Midnight EST right now.  The S&P futures are currently down about 46 points with the Nasdaq down about 50 plus.  There have been fireworks set off today in the banking sector.  Bank of America has acquired Merrill Lynch for about 44 Billion or, $29 per share.  I am still struggling to understand the logic in this move by Bank of America.  They paid a huge p

When Lehman was 8 on Tuesday, we called for 0.  We are almost 50% into our target after today's action!  Lehman's inaction is giving the street reason to doubt this banking giant.  The question now is, who is next.  From the looks of it, Merrill Lynch may have a similar fate.  As of right now, MER is trading at 18.75, down almost 20% today.  This stock has bee

The $XAU, gold and silver sector has taken a beating like I haven't seen.  This selloff is brutal, straight down from 210 to 110, in a matter of 8 weeks.  The head and shoulders top formation that I mentioned a few months back is nearly complete.  The technical damage is actuall

When I review the Lehman Brothers chart and watch its tape daily, I draw many of the same conclusions I drew with Fannie Mae and Freddie Mac before they moved to 0.  Lehman Brothers is next.  I believe that they will be next in line for a major shakeup.  They will most likely be acquired by another firm at

Okay, we're back.  Our web host has been playing games with us all week and shut us down for nearly 18 hours!  We finally were forced to upgrade our service package due to too much traffic.  Those problems are behind us now, so let's move on.

Wow!  As I write this, the S&P futures are up 33 points with the Dow Jones futures being up nearly 300, and Nasdaq 100 up 38.  The market is all cheered up over the news that Freddie Mac & Fannie Mae are going to be taken under conservatorship by the Federal Government.  It appears that this news was leaked

The Dow Jones Industrials was pounded today, down 345 points and more importantly blasting through key support levels that we discussed in our last update.  Rising jobless claims, faltering retail sales, and talks of deflationary pressures stung the market today.  Another ugly rumor surfaced in the financi

Labor day is over and so should the summer doldrums.  The big boys should work their way back into this market this week and definitely next.  Volume should expand over the weak levels that we have been witnessing off the bottom in July.  The markets have become very volatile and it would be a great time for the bigger players to capitalize off of this rally and jam this market down fast to load up for the final bottom that should be put in within the next 4 to 6 weeks.  The last few weeks have been like watching paint dry.  The choppiness has taken the market nowhere.  No leadership has been taken by any large amount of money and this needs to happen before we see a sustainable rally. 

Let's take a look at the Dow Jones, which we have been tracking pretty closely for the last few months. 

There are a few things going on here:

1)  We have noted on the chart below how the Dow Jones continues to fail at the 38.2% retracement level from the July bottom.  In fact, it has failed at that level 7 times if you include the false breakout that occured above that level for a day.