Tuesday, August 11, 2009

Signs of Weakness.... Egads!

We're finally starting to see a few chinks in the armor. At the risk of reading too much into some morning weakness (as most know, morning weakness has been met with afternoon strength like a gazillion times over the past month), I'm going to highlight a few charts illustrating some major fib levels we've run into that may be the cause for the pause in the markets. I for one think a retracement would be just what the doctor ordered for this extremely overbought market.

Although the Nasdaq 100 (NDX) has been a market leader, its run-in with the 50% retracement level has certainly provided some headwind for this tech laden index. It may just have a date with it's 20 day MA today or tomorrow.

[Source: EduTrader]

The S&P 500 Index (SPX) has lagged the NDX and just recently tested its 38.2% retracement level. We'll see how far today's weakness takes us, but it would certainly be nice to see a drop towards the 970-980 area.
[Source: EduTrader]

Tomorrow's Fed Announcement (2:15 PM EST), should provide a bit of a catalyst to fuel a market move one way or the other. Let's hope market participants use it as an excuse to continue the selling.

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