Monday, March 2, 2009

Morning Update/ Market Thread 3/2

Good Morning,

More problems overseas, this time with HSBC, got the futures tumbling last night.

This morning's lows bottomed in the range I was looking for one today as it got pretty close to the bottom of current channel and it actually exceeded the target for the latest bear flag. Note that the numbers produced on the /YM and /ES are what Seth would call "qualifying" numbers 6,866 and 711. We'll see how long they hold, right now the /ES is back up to 720 which is down about 15 points from Friday's close.

Of course AIG losing $62 unbelievable billion and receiving more bailout money from the government isn’t exactly helping the situation either. Why would we help a company whose stock is only worth a few pennies a share and lost $23 in a single quarter? Well you might say, like me, that there’s some kind of group psychosis at play and you would be right. You could also say that there’s a robbery taking place and you would be right. You could also say that the world of derivatives is blowing up and if AIG goes down the broader system would go down, and again, you would be right. But it’s going to happen anyway, and it’s going to give those who were smart enough to stay away a golden opportunity. There’s just going to be a lot of pain between here and there.

Those inverted hammers have obviously been invalidated and I’d say that the open will qualify to satisfy the large price movement that the small movement in the McClelland Oscillator called for on Friday. There is very little support beneath us now. Nailing support areas is going to be more difficult to do and I think it will make doing channel work all the more important.

Consumer spending rose .6% last month, it was the first increase in the past 7 months. ISM manufacturing index comes out in a few minutes

Best of luck to your trades, I’ll be peeling some off, especially if we get on the bottom of the channel and will look to do it again on a bounce or grind sideways to the top.

Nate