Exposing Ideas to the Envelope of Serendipity

Contact moo at: bluechipbulldog@gmail.com

Monday, March 1, 2010

Farewell February

The markets will usher in a new month on Monday, hopefully one with a tradeable trend and a tad less erratic action than often characterized its prickly predecessor. Earnings season is winding down, but a flood of economic data due out this week combined with natural disasters, congressional drama, and the evolving debt crisis in Greece and the Eurozone promise to keep things lively in what has been very much a news-driven trading environment.

From a technical standpoint, the February 5th intraday reversal has held so far, but the rally off that low has carried us back to a level where we spent much of November and December essentially wedged between a rock and a hard place. Important resistance lies just overhead, first at the 50-day SMA, and then at established horizontal resistance. While much of the stock blogosphere seems to have turned notably more bearish recently, the market's signals remain quite mixed. Volume has been apathetic at times, but resilience has been impressive. A good many stocks are continuing to make new highs, $NYSI has continued to trend higher, and an increasing number of charts seem to be setting up with nice bases. Many weekly sector charts have fairly bullish patterns as well, but the patterns are in many cases butting up against resistance levels where the moment of truth may be near. The most prominent pattern that I am watching right now is a nearly-completed inverse head & shoulders pattern in several of the major indexes. Take a look at the pattern on a 60-minute chart of the $SPX. 

To be continued...
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