Top Line: The stock market is in a place where it needs to make another decision, does it go up through heavy resistance or not? We here at the Update are assuming it will decide to go up through it but the line of resistance is strong right here at 12,750.
The evening has gotten away from us but we should be focusing on the market's moves anyway. The Chairman of the Fed was speaking today, the market traded up and then couldn't hold on to those gains, ADP suggested that the Friday jobs' report may not be as bad as some fear, the Senate decided to try a bipartisan arrangement to aid housing, before the market opened Best Buy managed to put in a better number than expected, and RIMM gave the market good news after the close. Of these items, there is one that stands out tonight...the market's moves.
For those of you who have been reading this blog for a while, you may remember the 12,750 area in the Dow. We had used it as a ceiling over the past few months and it worked pretty well back then. Today, the Dow got it in its head to move up but that line represented strong resistance even though the Dow didn't quite get to it during trading...it was having trouble.
Our primary thought is that the market has put in a short term low that will give the Dow a bounce to rally it above the 13,000 line but we need to see the 12,750 line get taken out first. There are several players who are watching the same line. To make sure that we take a good run at it, the market decided to back up today and maybe it will take another run at it soon enough.
When we saw the large move on Tuesday on low volume, it looked to us like a finishing move rather than the start of something big, but we need to be Patient with this little correction. Any time the market corrects itself, either up or down, the direction is more of a waffle than a straight line. Still, there is a chance that Wednesday's highs will be the highs of this correction. If so, that could mean we drift around here, plus or minus a couple hundred points and then go lower. Right now, we need to wait and be Patient.
FSI: 78.30 (not much going on today)