May 8, 2008

The bulls wouldn’t let the bears sustain any momentum today despite another record close for oil. Heading into today it was anticipated that the market would continue to see weakness as it looked for excuses to sell the recent rally. However, for the day the S&P 500 bounced between the unchanged mark and 1400, which has been a key level among technical traders, but still finished the session with decent gains. A tug war between the bulls and bears have begun and we will shortly see if we can consolidate at these levels and move higher as the economy begins to brighten, or if the consumer finally taps out and allows the bears some leverage. The retail reports from to today suggest that the consumer is ready to go the full distance. It was important for market psychology for the trend line to hold, which it did, and may suggests that the institutions are looking for opportunities to put their hordes of cash to work in anticipation of a better second half of the year.

Let’s look at the NASDAQ and S&P charts…