Well, That Was Quick!

by Adam Beaty

The market had no problems dropping 1.19% today of continued troubles in the euro nations.  In our Weekly Forecast we were looking for a move to take this market down to the 1312-1314 area.  We were not expecting to get that in one day, and the first day for that matter.  The market found itself sitting on two levels of strong support 1) it has hit the bottom of the downward channel and 2) it has filled the gap left for it on 04/19/11.  This move would suggest a bounce here before continuing this leg down.  We are looking for a price target of 1325 for a bounce.  If you were unable to be short on Thursday or Friday last week then chasing this downtrend could be troublesome.  There could have been some breakdown plays today, probably no breakout plays to play.  The best types of plays for this market will be bounce plays.  Look for stocks that could have sold off some to reach down to a support level and buy there.  When the market and individual stocks are both hitting support you have the best odds to take advantage of a bounce.  For bounce plays look to place your stop-loss under support for a small loss if it does fall through.  If you are still holding out for a breakout play then make sure you take profits quick when you get them.

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