It was a brutal week for the market, nothing was really spared. The financials fell apart, commodities imploded (hard and soft ones), materials and yes even technology got thrown out the window. Copper ($JJC) has just imploded. Bernanke shot blanks, but I think fears of a double dip here in the U.S. and global slowing was the real culprit.
The wedge on the S&P ( $SPX) “finally” broke on Thursday and did not recover on Friday, but who would want to be long into this weekend?
The Russell 2000 $IWM had been working a head and shoulders pattern in that rectangular box. It also broke on Thursday.
Just like The Russell, the Materials ( $XLB) sector broke the neckline of a head and shoulders pattern on Thursday.
The financials ( $XLF ) broke and they are testing July 2009 support.
Hindsight is always fun, but I guess that was a double top on the yellow metal ( $GLD) a few weeks ago.
I highlighted this bear wedge on Google ( $GOOG) a couple of weeks ago. It broke on Thursday and the red and purple lines could be the next levels of support.
Of course a strong snap back rally will probably be coming at some point soon because nothing goes strait down. Even when the market was crashing in 2008 we experienced melt your face off reversal rallies. For now risk has left the building and t is possible some funds (especially long only funds) are under massive pressure. They need to settle whatever isn’t nailed down and these deleveraging periods can last for a little bit.
I’m waiting for a rally at some point but I am also prepared for the worst. We covered most shorts on Thursday late in he day. For now though, rallies should probably be shorted until further notice. The market has done a decent job of holding that 1120 line, if that breaks 1100 will be the next magic number. The bears have drawn blood and for now it’s their game to lose.
Good luck next week. If you would like to see my performance for last week, please email me at: [email protected]
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