Thursday, April 12, 2007

Friday the 13th

Market Action:
Thursday’s action continued what we saw on Wednesday but only for about a half hour.  The Dow dropped into a 50 point hole as the market opened but that’s when the buyers returned.  We might add, they returned with a vengeance.  From that point forward during the day the market just churned its way up with only slight pullbacks for reloading.  By the end of the day the Dow was up 68.  The broader market followed mostly the same pattern.

After the bell, AAPL (Apple Computer) announced it was delaying the new operating system, Leopard, until October instead of the June date.  The news did push the stock down somewhat in after hours trading, a couple of percent.  This price move is pretty meaningless given the stock is near its all time high.

The way the market fell on “news” on Wednesday, we were somewhat concerned by the quality of the decline even though it was on pretty good volume.  Thursday’s opening also runs counter to the way we think.  Usually when we have a down opening, there is no where to go but up.  Yes, that matches the way we normally think but it wasn’t what we thought would happen.  We were hoping to see the market convince us that it was going down and Thursday it did not do that.

Now, we are going to go into Friday the 13th wondering if there is any reason for the sellers to come in and prove to us there might be more downside than the big one day down move we saw back in February.  Well, the market is now fairly overbought which is one thing for the bears.  And, the volume was lower on Thursday than Wednesday.  

The pattern in the market has become a bit clouded but the message is still pretty clear that the market should go down after the large break back in February.  But, all things considered, there is always a chance for an overbought rally to occur.  We don’t give it a lot of room to go and we are not saying tonight that it will occur.  We are simply seeing the lack of follow thru selling and it doesn’t feel that strong.  “Feel” is not really in a technician’s vocabulary but many times you can feel the move.  We should have felt the move already but the selling just hasn’t happened.  Yes, the market has been up nine out of ten days so that could have something to do with the feelings.

Bottom line is that there is every reason to think the market is going to go down, at least a little from current levels (all the reasons above) and we would welcome a little selling.  If Thursday’s low is significant, we should know fairly soon—we don’t think it is.

Dow Industrials:  12,552.96  +68.34
VIX: 12.71
HUI:  355.91
QQQQ:  44.56
QQQRS:  1.29 bid
QQQRT:  1.81 bid
RYVNX:   16.45
RYAIX:  21.23
RYCWX:  35.45
TLT:  87.39
BEGBX:  13.90

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