February 19, 2008

We had Monday off, and while it looked as if the news from overseas would help rally the markets throughout the day, it was only able to sustain those rallies through the morning. When all was said and done we saw all the major indices finish in the red. This is clearly discouraging for the bulls who were hoping that the nationalization of overseas banks would give the market something to get excited about. Instead, it was nothing more than a ‘sell the news’ reaction.

We are still clearly in bear mode, and don’t look to be getting out of it anytime soon. We need to retest and hold the January lows, before we can get the institutions and hedge funds even slightly interested in stocks to the long side. Be patient, as we are likely to see more panic selling and irrational behavior in the coming days.

Let’s review the charts…

NASDAQ saw the greatest amount of selling as it was unable to hold any of its gains. It looks like we are almost certain to retest those lows from January. HPQ had a positive earnings report, and it will be interesting to see if it has any affect on market sentiment going into the open.

CLICK HERE FOR THE NASDAQ CHART

While S&P was better off than the NASDAQ, it was still a depressing for bulls to see all of those gains slip away so quickly. We were unable to rally out of the upper-channel of the downward trend. We’re likely to see more selling tomorrow.

CLICK HERE FOR THE S&P CHART

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