Monday’s Trading – 8/31/09

On Friday morning, I mentioned the bearish volume action in the IWM. And sure enough, the IWM had a bad day on Friday. Not only did the IWM do much worse than any of the other Big Five ETF’s, but it also closed its August 25th gap. It had dipped below that gap before, but Friday was the first time that it closed below it, and that is another bearish sign.

DIA has the same gap as IWM from the 25th, however it managed to close above it on Friday. DIA was down on the day, though holding that gap can be seen as a bullish signal. On the other hand, DIA’s relative strength to IWM may be a sign of risk aversion as investors head for the safety of the less-volatile large caps. So, DIA is an important ETF to watch on Monday. If it closes below its August 25th gap at 95.14, that would be a rather bleak sign for the market.

I have been talking a lot about the QQQQ’s TARP gap recently, and at the peak of Friday morning’s exhaustion gap, the Q’s tagged the top of the TARP gap at 41.08. That was the close on September 26th, the day before Congress shot down the TARP. However, the Q’s were not able to close there, so the gap is still considered strong resistance. If the Q’s can close above 41.08, that would be a bullish sign for the market, though a return to a gap such as this very often marks an important top.

The SMH broke out of its trading range on Friday and made a new high. So that is an important development. However, it is not a panacea for the Q’s because the cyclical semi stocks have a small weighting in the QQQQ. For example, AMAT only has a 0.6% weighting according to this page.

58 Responses to “Monday’s Trading – 8/31/09”

  1. Yerk says:

    Re gaps from trader mark – and of course we have a scheduled pomo today
    “If this market acted like it used to, with all the warning signals flashing – I’d be in a much more heavily short exposed crouch. But with constant support from “somewhere” at any period the markets look ready to roll over, it is like betting against the immovable object. In the old market, I’d say S&P 950s would be a very probable first level objective with gap fills on S&P 906 and NASDAQ 1800 the obvious secondary objectives. In the new subsidized market, I don’t know which rules still work…”
    Bill McLaren: “This is not precision timing but does indicate a spike up could exhaust this section of the trend. The “normal” trend in this circumstance can run to 220 to 270 calendar days. So even if the index runs down from the very powerful 180 day cycle [Sept 5th] the odds favor it coming back up for a marginal new high or a test of the high.”
    For today a retest of the futures’ highs at 1030 might be in the cards for the spx as bears could not decisively knock down the dax.

  2. Larry says:

    Yerk, I’m now even on the short ETF. But the rest of the world really don’t care about what’s going in China. I must say I’m surprised.

  3. K says:

    bizzare forex trading. usd/cad 1.25%

  4. Larry says:

    Very bizarre. Shanghai falls another 7% and the dollar weakens?

  5. phil says:

    there is too much bullishness for upward explosion at this time…we need some panic

  6. George says:

    IE8 is messed up with XP.

  7. K says:

    george put it in compatiblility mode (google it)

  8. K says:

    look at aig holy whacko i missed getting out.

  9. George says:

    K,

    I tried compatibility mode and it still hiccups. Needs work. TKS.

  10. phil says:

    K……dow down 100….tlt cant rally…….houston we have a problem

  11. K says:

    huge problem phil

  12. George says:

    Had to go back to Opera. IE8 is needed for some sites like YouTube and such and makes my PC fan run in high mode. Something ain’t right.

  13. Larry says:

    Dollar acting very strange.

  14. Larry says:

    The people selling US Dollar today, what are they buying?

  15. K says:

    they are buying GOOOOLD or copper

  16. phil says:

    K…….wrong…………..gold down $8…..copper down $13

  17. Larry says:

    From Head of China’s Sovereign Wealth Fund (picked up via ZeroHedge)

    “It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,” he said.

    http://www.reuters.com/article/ousiv/idUSTRE57S0D420090829

  18. phil says:

    copper down 13 cents

  19. Larry says:

    Are they buying Yen? There is not enough Yen out there. And in any case, why are they selling Dollar?

  20. Jim says:

    Phil: If the S&P is forming a bear flag today, that’s exactly what you’ll get.

  21. phil says:

    JIM….i see it as a 4th wave triangle…im waiting for the post triangle downward thrust

  22. phil says:

    unfortunately it doesnt seem to get us much below 1010….will wait to see how it plays out….that would be the 50% retrace….1002 is .618

  23. phil says:

    falling below the blue line will send me looking for my grizzly mask

  24. George says:

    I’m fighting the browser wars today. :(

  25. phil says:

    GEORGE…..sorry about your problems…i try never to upgrade unless forced to

  26. Mitch says:

    George:

    Are getting streaming quotes (remember they launch as a pop-up)?

  27. Jim says:

    This is like watching paint dry. Maybe we’ll get something going in the last hour.

  28. Mitch says:

    XLE coughing up all the Hurricane Bill gains – demise to resume unless we get the customary chicanery?

  29. Mitch says:

    DIG/XLE making an island top from 8/21. FXP (Hong Kong) looking like a resumption of the 14.00 trend line.

  30. K says:

    GOT SPY SELL SIGNAL

  31. Mitch says:

    TLT back at par.

  32. phil says:

    mitch…hope you are right…i will be long gone by 98

  33. Mitch says:

    phil:

    I was right – TLT made it back to Fri close. I see a rally up for the afternoon – the question is do we make it to Fri close or just half the gap?

  34. Mitch says:

    for SPX that is.

  35. K says:

    phil, 97 and you can have my 95 calls

  36. phil says:

    mitch….98 is for illustrative puposes only…i have coupon bonds i want to sell at 4.04% yield….that is prob close to 98 or so on tlt …i will let you know when i sell

  37. phil says:

    right now yield is 4.18%

  38. phil says:

    MITCH….remember long ago i was looking for yield peak in june??? look at daily $TYX chart……nice SPIKE at the top eh?????that worked out well….now yield low is due in sept….after a correction more bond rally coming later

  39. Mitch says:

    phil:

    I have had a little trouble identifying the time frame with your calls . . . however I don’t doubt you. You have been T-bond bullish and you may discount the crowding out and supply problem, although I’m not sure why – other than the over-capacity and unemployment keeping inflation in a range you feel comfortable with.

  40. George says:

    phil,

    I don’t like to upgrade either but I was getting overlaid text on some screens. Now it’s even worse!

  41. George says:

    NOw, Opera is messing up when I log onto my broker multiple times. I’m going to get IE7 tonight or Firefox and see how they do.

  42. phil says:

    mitch…i dont do fundamentals ….its purely a technical and seasonal play

  43. Mitch says:

    phil:

    Keep it coming – it’s all news to me. The rest is instinct.

  44. George says:

    Gap filled on SKF if you include the wicks.

  45. Yerk says:

    George, hope you can sort out your problems… Sounds like the issue is deeper down in the system, below the browsers. I’d never go back to ie7 from ie8 – maybe that’s where my bias is coming from.

  46. George says:

    Yerk,

    IE8 does seem to be faster. The compatability feature doesn’t straighten things out. I’ll Google the problems later.

    MS also messed up Outlook Express. Had to switch to Windows Live Mail. Nothing but problems today. Ha, could be worse.

  47. George says:

    BTW, IE8 works great with Vista. They have a sneaky way of slowly killing apps.

  48. Mitch says:

    Mitch Says:

    August 31st, 2009 at 2:11 pm
    phil:

    I was right – TLT made it back to Fri close. I see a rally up for the afternoon – the question is do we make it to Fri close or just half the gap?

    Mitch Says:

    August 31st, 2009 at 2:11 pm
    for SPX that is.

    COME ON GUYS THAT’S A GIMME

  49. Yerk says:

    George, LOL. Blogger had problems with IE which got worse and worse. Managed to find a google blog where they were discussing things, dropped the links and two days later things were sorted out. Might have helped that I complained that these “killing competitor apps” tactic reminds me of M$ :mrgreen:

    BS action today, no commitment. Maybe the data tom morning will move things.

  50. K says:

    George,
    I might be able to help you remotely. At least take a look at your system. You have my email by now so feel free to continue this there.

    My going is a buck a minute :mrgreen:

    Other than that see if there are anymore windows updates. Are you service pack 3 yet?)
    I think you are a bit tech savy if you have all those screens :D

  51. K says:

    my SPY sell warning earlier today was just a warning and it didn’t print. but be aware that tomorrow could be the printed version :P

  52. Larry says:

    Mitch, that’s a gimme.
    2. Someone dumped the Dollar at 10 am EST. Don’t know who.

  53. Randall says:

    This should get Larry stoked…

    http://www.zerohedge.com/article/trimtabs-ceo-charles-biderman-discusses-massive-insider-selling

    the loneliest trade has made many lonely people a fortune…