Monday, September 14, 2009

Market Observations - Sell the News Setting Up?

Today's action strikes me as a short squeeze and hedging prior to an important number...I imagine that given the abuse bears have had to endure, a chance of a rallyable report is beyond a reasonable risk at this point. So, I think people attempted to set themselves up for their trades for tomorrow. In general breadth was not great at less than 2 to 1 and up/down volume was equally unimpressive. 

So, whether a higher high is made tomorrow on the retail sales numbers, or whether one has already been put in today, likely is of little consequence to the sell-the-news potential of the Retail Sales Report announcement tomorrow

this chart is from 9/10/09 and does not reflect today's prices

If a new high is made tomorrow, I would imagine it could be a throw over up to the 1062 to 1069 area that I previously pointed out. The stock market has tended to be at its weakest after retail sales reports, therefore, a new high, especially a gap up and throw over could be an ideal place for a strong reversal to start. A high here is also within my timing window presented a few days ago. 

this chart is from 9/10/09 and does not reflect today's prices

Given the state of new stimulus (nothing new coming to impact retail sales anytime soon) and the extreme expectations this report would require to support the market prices at or above these levels, downside risks far outweigh the upside risks. 

Below is a chart of the Dow...we are at formidable trend line resistance as you can see.

© 2009 m3, ltd. All rights reserved.