David Moenning

The Pressure’s On

After the bulls were turned away from the 950 area on the S&P, a pullback to the low end of the range certainly made sense. As the market bumped into resistance for something like nine straight days, the pressure grew for the bulls to break on through to the other side. And once our heroes in horns failed to “get ‘er done,” the whoosh to the downside wasn’t exactly surprising from a technical standpoint.

However, now that the Dow and S&P are flirting with the low end of the trading range that began in early May, the shoe appears to be on the other foot as the bears are undoubtedly beginning to feel some pressure to keep moving the ball down the field.

To be sure, the 880 zone on the S&P as well as the 8220 area on the Dow are clear lines of defense for ...

Has the Tide Turned?

If you had been out on the golf course yesterday afternoon and someone told you in the clubhouse that the Dow closed down 8 points, you might be inclined to think that it was a blasé day where nothing of subsequence occurred. However, you’d also be mistaken.

Okay, we’ll admit that the price action wasn’t terribly inspiring yesterday and that on a chart basis it did appear that it was a rather no-nothing day. But, it is our humble opinion that there was definitely something worthy of note to take away from the session.

No, we’re not talking about the fact that a couple of big-name banks will need to raise some additional capital. Actually, it is kind of surprising that it took so long for the results of the so-called stress tests to be leaked. And no, we are most definitely not talking about the ...

Looking Forward?

Although the stock market is overbought and there is some significant resistance looming overhead, it would appear that traders are beginning to look ahead instead of back. Friday’s action was a perfect example of this as it would have been very easy for the bears to take one look at the jobs report and proclaim there was no hope in sight for the economy. But not only did our furry friends not get a vicious selloff – or even a modest selloff for that matter – the bulls managed to turn the tables on their opponents and rule the day once again.

Yes, we recognize that the volume was unimpressive. And yes, the economic data was a bit of a bummer. But the breadth was stellar and as any trader worth their salt knows, a market that can’t go down on bad news is one that wants to ...

So Far, So Good

All eyes were fixated on the charts yesterday as just about everyone who has ever drawn a trendline knows what’s at stake here. In short, everybody is watching the tape action very closely for clues as to the direction of the next move. An immediate reversal down, which has been the norm lately after a nice up day, would negate the positive action from the blast higher while another big up day would be considered a follow-through day. And while neither occurred yesterday, we’ll have to say that it’s “so far, so good” in terms of the potential for Tuesday’s rally being the start of something meaningful.
One of the things that people new to the chart watching game may not understand is that the all-important follow-through day – commonly defined as an advance of 1% or more on an increase in volume from the day ...

Reassurance Received

It isn't often we can label an across the board decline of -1% in the stock market as a good thing, but after yesterday morning’s flirtation with disaster, that’s exactly what we’re going to call it. Stocks initially opened lower on the back of yet another disappointing report on the housing market and the usual chatter about bank nationalization. However, once Ben Bernanke started talking again, things turned around.

In his second day of Congressional testimony, the Fed Chairman first reiterated his view that the economy should recover in 2010 if things go according to plan. Then after that, he cemented the idea that nationalization of the banks was off the table with the statement that the government does not plan "anything like" nationalization, which would wipe out the shareholders. Bernanke went on to suggest that there may also be some benefit to reviving the uptick rule.

So ...