MARKET COMMENTARY

I hope some of you had caught some fishes on Thursday. There were so many of them that I do not have enough lines to catch them. The Dow has finally done with the rebound - so are other major market indexes - and made a big U-turn. Although there are market commentators who tried to link the sinking of the Dow to Ford’s huge loss announcement, higher oil price, and higher jobless claims, no one by now should dispute the more plausible cause which is none other than technical factor. The indexes had simply hit their strong resistance and the bullish rebound was getting old. Most investors are getting ready to dump their holdings of stocks when they sense a wind of change. In other words, most the market players are still in bearish mood. That explains how the market reversed from the bullish rally.

With all the major indexes beaten down heavily on Thursday, I expect more follow-throughs on Friday. Over the next couple of weeks or more, we can look forward to more breakthroughs of new lows. Some of the strategies I would recommend to consider are longer holding of short positions and buying of longer term of Bear Put spreads for options traders. Go for the indexes.

Oil is on rebound mode. But because this rebound occurred only after a brief crash from the high of $145, the rebound can be short-lived. At this time, I am still betting the crude oil to go down. Just watch for the end of the rebound.

DJIA Daily Chart

Watch the support level. This applies to the Dow, and S&P. I am hopeful of a breakout.

SPX Daily Chart

While I target 660 of RUT as strong support, I do not expect the Nasdaq to find any support at around 1780. Breakout of this level is more likely than other indexes. Nasdaq will show the way for the direction of the financial markets in the next few weeks.

NDX Daily Chart

STOCKS TO WATCH:

NIL

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