Bears Reporting For Duty

February 4, 2008

It appears as if the markets slept in today, as New York’s own was crowned Super Bowl Champions late last night, because the volume today in the markets was anemic at best. While the market had its best week since 2003 last week, it seemed likely that we would see some sort of sell-off and profit-taking, and that is exactly what we got. Each of the indices managed to close over 1% down on the day. The markets continue to be overbought on a short-term basis, and market participants will be eager to see, whether the bulls are capable, in the face of so many negative news stories and a slowing economy, to hold the gains realized from last week.

While it appears that the market may be putting in a bottom, we believe that we are likely going to retest the bottom put in last month before finally reversing course and breaking the downward trend we are in currently. The Fed cuts that we have gotten over the last couple of weeks has kept the market from going much lower, however, we don’t believe that the ‘weak-hands’ were shaken out in last month’s major sell-off, and as a result, it would seem necessary for us to, at a minimum, test our recent lows once again. If they hold, we will be able to move ahead once again.

Let’s review the charts…

The NASDAQ had noticeable selling in AAPL and GOOG, and didn’t sell-off nearly as badly as we originally thought it would. Volume was light, which keeps the rally in place from last week.

CLICK HERE FOR THE NASDAQ CHART

Today’s sell-off in the S&P was also done on very light volume, and should not be a major threat to the bulls resuming its rally from last week. However, last week’s rally has us in overbought conditions and bouncing off of the upper channel line, so don’t be surprised if today’s profit taking continues into tomorrow.

CLICK HERE FOR THE S&P CHART

We are currently working on adding a new feature to the website called the “Shareplanner Stock Screener”. We believe that this feature will give our readers more tools at their disposal and ideas for various types of stocks to trade and invest in. Stay Tuned!