The One Day Rally Is Over!

Posted by K on September 28, 2009
Market Analysis

Last night I posted about the S&P possibly having a Kicker Bullish Setup.
Well  The S&P Rallied 18.60 points to 1062.98.
The Setup was not executed perfectly (market would have had to gap higher today then go the distance)

All bets are off on an extended rally that needs to go higher than 1080.15 to be worthy of anything.

While the market rallied the S&P only traded at half its normal volume.
Stocks like Citigroup which had traded over a billion shares a day, are lately trading at less than 500 million.

The TED Spread which measures the general risk in the economy has been rising the last couple of weeks. today alone it rose 5.42% which means interbank loans are now riskier.  This is still not significant enough and I would like to see another 33% increase in the TED before I really put a lot of my sidelined money on the short side.

We had MBIA (MBI) stock trade up  11.38% today only to be down over 7% in after hours.. why?

Standard & Poor’s on Monday cut its ratings on MBIA Inc and its structured finance insurance arm, MBIA Insurance Corp, citing an expectation the company will continue to take significant losses from insuring risky loans. … The outlook for both companies is negative

Well if that wasn’t enough the dollar has began to show some strength as well despite the almost 20 point one day rally.

Bottom Line:  Be very careful if going long from here on out. The false optimism game has been played for far too long and you might get stuck holding a worthless institutional stock come October.  It’s also end of month markup so for the next few days prices might be kept afloat by institutions.

Have a good one.

-K

LinkedInEmailShare

Tags: , , , , , , , , ,

  • shellbuck

    The market is in the 5th wave of a five wave move up that should complete B wave up of an ABC move .Look for ethier an ABC up move or an A-E five wave move to complete the bearish wedge possibly OPEX.1150 to 1200 target.C wave will be ugly and most likely test March lows

  • K

    thanks shellbuck!
    I am not a real EW follower but I know it works well.
    Thanks for the heads up.