Market Bounces Yesterday, Today Weakens

Yesterday, the market rallied for the first time in three sessions, but late in the day a significant portion of the gains were taken back as the market rolled over in the last hour of trading. The Dow closed at 8,331 and the S&P 500 closed at 893. We still continue to look for the market to retest the last prior significant support area between 875 and 877 on the S&P and if that level is violated on a closing basis, we are expecting the 850 level at the 50 day moving average to get tested. This market remains resilient today though, especially the financials, as we are down about 40 pts on the Dow and 7 pts on the S&P at mid-session today. Goldman Sacs (GS), leads the financials today so far.

We await another trend turn in the market to take any long positions, but we have un-wound the overbought conditions that appeared on the 60 minute charts over the 9 week rally we just had. Just because we un-wound the over boughts does not mean we take long positions again. We need to wait and see how the S&P reacts at the 875 test level if it can get down there to decide to take on more longs. Too us, shorting makes no sense here as we have pulled back already significantly and we are not experiencing over bought conditions at the moment. Stay tuned for Monday, is how we are playing things at the moment.