The indices are in trouble for now and all of them are in bear flags. We closed just below support at 1085 on the S&P, but we are also getting very oversold. If we don't completely rollover today we could be setting up for a great upside rally. Some names I like long are: MEE (down about 25% in about 7 trading days), XME and XLB. These are deeply oversold and on my radar. I also think the dollar is due for a breather which will be good for the materials.
The financials actually led all day but faded hard after the anti-climatic news that Bernanke was reappointed. So, this week we removed some uncertainty, Fed day is done, Ben is in, and the State of the Union is behind us. The conversation now turns to bank regulation, how tough will it be and in what form it will pass, here is some more color on the topic. There is always a wall of worry to climb.
The question on everyone's mind is this, is this the start of a major move down or just a healthy correction from very overbought levels? The next support on the S&P is the 1069-70 level, however the 1085 level has done a great job of holding so far.
Friday, January 29, 2010