06 April 2009

Charts to Ponder for the Start of the Trading Week

Before I get to the charts I'm pondering for the start of the trading week, Trader Mike suggested reading this market outlook piece by Dr. Duru. Here's the choice excerpt:

Investing gets much dicier as we nudge ever so closer to the well-watched resistance level of 875 on the S&P 500 - maybe the market pushes to 900 just to salt the wounds of bears. T2108, the percentage of stocks trading above their 40-day moving average hit 83% on Thursday. The last two times this happened, we got a top the first week of January, 2009, and the all-time top in October, 2007. Recall that since 1986, selling the S&P 500 when T2108 crossed the 70% threshold, above or back below, has provided a practical capital preservation strategy. This means that we are in over-bought territory. The risk/reward is now very poor for playing chicken with the S&P 500's next resistance level. This next push represents just another 5% of performance. Not a good spot for initiating new longs, and a great spot for selling shorter-term holdings into the rally.

With this quote in mind, onto the annotated charts:

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