Tuesday, June 30, 2009

Treading Water

The markets sold off today on heavier volume, adding to the distribution day count. The sell off in the Dow and the SP500 appeared to be impulsive, but the action in the Qs was less clear. Tomorrow is historically a bullish day, but I expect the action will be muted given the upcoming employment data on Thursday.

The markets remain at a key juncture and until they move one way or other there is little that can be added to prior analysis. The Qs remain hung up below the 36.50 resistance level. A solid break above that level could turn the tide up, but a strong move below 35.61 should accelerate the correction.

The June lows are the most important support level as they now are the low of the high month for most indexes.

An important range that I look at is the first 5 trading days of the month. Often a strong move above or below this range will set the trend for the month. Also, the end of month close relative to this range often will indicate trend continuation or reversal. The Dow and the SP500 both closed below the low of the range of the first 5 days of June, which may be pointing toward lower prices in July. It will take 5 trading days in July, using this method, to see if things are changing.

Gold headed lower today and will probably try for 900 before another rally attempt. Oil looks like a small double top, which may be portending a correction to the 53 to 58 retracement zone. The DTO might be worth a look here with a target around 100.

1 comment:

dave said...

Since last Oct, there has been AT LEAST one 200 pt up day in the DJI during the last 5 days of the month or the first two days of the next month. That encompasses 8 such periods ... Oct 08-May09.

Even though we're up 125 pts currently, IF we don't have such a 200 pt up day today, we would have one more day to keep this streak alive...tomorrow.