Monday, September 28, 2009

Weekly Watchlist 9/28

The 3rd quarter ends in just a few days and then October comes as the markets are showing signs of toppiness. The bears are roaring the past few days as they believe they called the top. Lots of traders piled in short the last few days thinking the same. They have stops that could be tested early this week just above current levels. Monday is a Jewish holiday so volume won't be quite average. That, in addition to end of quarter window-dressing the next few days could result in a weak bounce back off some short term support between 1035-1030. Then by Wednesday the market may rollover and continue lower if the jobs data at the end of the week does not impress.

From looking at some scans and other sector charts this weekend I think this correction could be more along the lines of 8-10% for starters. I would not be surprised to see 987 in the SPX soon as that is rock solid support. The transports are looking very weak and led the way down last week with the commodities as well. On top of this, the US dollar index daily chart is looking bullish and I think we could be at the start of an interesting short squeeze of a rally in the US dollar. The euro and aussie dollar look just the opposite and should selloff further imo. Oil broke some important trendlines last week as it came back to 66. I would expect crude to sell off further as long as the dollar rallies. You could easily see crude retest the 60 area.

The watchlist:



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