Sunday, March 1, 2009

The Weekly Trade 3/2

As we go into a new week and month the SPX closed last week at new multi year lows of 735. As of Sunday evening the futures are down in the low 720s. It does not look like a bullish start to the week, but that should go without saying. My bias is bearish to start off the week. There is very little reason to anticipate a reversal. Although it may occur, I wouldn't be betting on it. While the panic selling from last fall will probably be avoided, I think it will continue to be a more slower bleed lower. There is simply a lack of buyers and that forces prices lower the same way that aggressive sellers do.

Looking at the SPX chart to the left we are breaking below November lows but are quite oversold. But oversold means nothing at this point. Keep and eye on that volume Monday because Friday's volume appeared to be the strongest in 3 months, so maybe it shows that selling could be climaxing. Either way, there is no reason to be all that bullish just yet on this market.

With exception I think it will be a good time to get into the metals, specifically gold. It does like the gold market is days away from stabilizing and continuing its uptrend. At the same time, the dollar looks strong and the Euro seems like it wants to break under 1.25.

Economic data this week is heavy and includes:

Monday- Personal Income and Spending, Core PCE, Construction Spending, ISM Index

Tuesday- Pending Home Sales, Auto and Truck Sales

Wednesday- ISM Services, ADP Employment, Fed Beige Book

Thursday- Productivity, Unit Labor Costs, Jobless Claims, Factory Orders

Friday- Feb. Jobs Report, Consumer Credit

For Monday, I want to short into weak rallies. The pivot point is up at 739.50. Not too confident we get back up there, but if we fill the gap down and then roll over then I want be selling it. There could be some major pain early this week if we cannot get any momentum back above our daily pivots as they will provide plenty of resistance.

Lower prices might seem unreal, but they can and probably will happen. Trade what you see, and not what you hope for. Stocks don't lie. People do. Trade safe.

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