March 20, 2008

Today the market managed to recover most of yesterday’s losses, and gave investors a glimmer of hope heading into Easter Weekend as the market is off tomorrow in observance of Good Friday. The market will re-open on Monday, and you can rest assure, that fears and worries concerning other possible banks bellying-up will be on the forefront. We had an extremely volatile week, with the market alternating in extreme sell-offs and rallies; despite it all, the market finished in the green, and on the month the major indices are slightly up.

The problem with the market right now however, is that, though we have seen some solid rallies, they have been met with equal or greater declines, and consequently, we are doing little to repair the technical damage on the charts. Until some changes, are made on the technical front, we will be hesitant to commit large sums of capital to the long-side. We will continue to focus our efforts on selling the rallies as we have done in the past.

Let’s review the charts…

NASDAQ continues to trade within the downtrend, but looks poised to possibly test the 50-day moving average at some point next week. Assuming that it does, we will look to sell the test of the 50-day moving average using a trading vehicle such as QLD or a short position on QQQQ.


S&P has yet to make a sustained rally over the course of a few days. Two out of three isn’t bad as we saw this week, but if the market can repeat today’s performance on Monday, sentiment could take a turn for the better.