SPY, QQQQ, and IWM all have bullish piercing-line candlestick patterns on their daily charts. However, XLF couldn’t rally up enough on Friday and is instead lagging behind with a bearish-thrusting pattern. XLF is pouting over the prospect of having its TARP funds stolen by the UAW. I don’t know what the BKX’s two-day pattern is, however it is almost exactly the same as it was on November 6th and 7th. That was not a good time to be long.
So, while the candlestick patterns are mixed, I give a slight advantage to the bears since the banks have been leading the way down throughout this entire bear market. Rallies can’t get far without the banks.
The market has flattened out while waiting to learn the fate of Detroit, and is in a pretty neutral position technically. Both SPY and QQQQ have bearish rising-wedge patterns on their daily charts. SPY has drifted out the bottom of its wedge, but QQQQ is still inside. It will require some serious rallying to push the tops of these wedges up and transform them into bullish uptrend channels. Maybe a Detroit Bailout rally could do that, but it seems like most traders are waiting to short such a rally.
New 52-week lows on the NYSE have risen for four straight days, and that might be a problem if it continues.
When the futures plunged on Thursday night, there were too many bears cheering around the blog-o-sphere. That tells me that there are still a lot of bears grimly holding on, and thus available for squeezing. So that’s a point in favor of the bulls. On the other hand, I’ll bet that the sentiment surveys show another bullish surge this week. Combining these two observations, I think there might be one more wave up in this rally before the market rolls over. So, the bears may have to suffer one more hot poker, and the bulls should be looking to take profits on the next wave up
On his “Mad Money” TV show Friday night, Cramer marveled over how powerful the rally was, trash-talked the bears, and exclaimed: “IT’S A BULL!” A sure sign that the rally is almost over…
House Democrats have threatened to not release the second half of TARP funds. Why they would do that while begging the White House or Treasury to bail out Detroit is beyond me, and is probably why the WH has not acted yet. They say that the WH is working on a deal for Detroit, but the real deal is probably between the WH and House Dems over TARP 2. Needless to say, this sort of thing can drag out Detroit’s bailout in a game of chicken that could be fatal to GM and Chrysler.