Looking to a positive open
    Wednesday’s close was a disaster. The DJIA closed below its August low and the NASDAQ closed below its 200 day moving average. This occured on heavy volume as the New York Stock Exchange (NYSE) traded over 4 Billion shares. Deeper, the market internals were poor as NYSE new lows outnumbered new highs 22 to 1 and down volume was 85% of up+down volume. Ugly indeed.
    With futures up today, we must ask ourselves if Wednesday was the bottom and we can now push higher. To me, the answer is no. While the bulls will take solace in the fact that the NASDAQ and S&P 500 remain above their August lows and that market leaders Google (GOOG) and Research in Motion (RIMM) closed higher on the day, I think the long-term trend is down. Make no mistake, I expect the market to rally today and provide some quick profit potential. Also, I expect the DJIA to rally 2-3% over the coming weeks as holiday optimism dominates the news. All of these events will make it painful for the bears to stake their domiance. However, since we are entering a primary bear market it will also be difficult to get overly long the market. In this environment, I would lighten up any positions, stay off margin and watch for short sale opporunties. Over the next few weeks, rent stocks for upside moves, always use maximum risk control and avoid carrying too much balance sheet day to day. Doing so should allow you to profit today while positioning yourself for the future.
Curious question.. will we be up today solely due to the fact that it’s the Friday after Thanksgiving and most of the heavy hitters are on vacation? I would expect volume to be extremely light today which might result in a positive, but false, close.
Jorge,
I think there are two factors. The first you nailed – it is a shortened day without a lot of volume. Over the years this has been a positive day because it is easy to drive the market higher on light volume. Second factor, which I think will carry into next week, is the markets have been fighting the August lows and finally gave up. This sets us up for a longer downtrend. I think the bears will relent, the bulls will rally and say the worst is behind us, then we head lower. It is a trap for the bears to suck more money into this market before pushing us lower.