MARKET COMMENTARY

The market was quiet for the past two days. Volumes were less than half of what it had been recorded just a week ago. This signals calm before another storm ahead. The US government is deliberating a bailout plan for the economy on Thursday. Whatever decision arrives at will certainly jolt the market one way or other. Hence, I am prepared for an active day with wide swing.

Wanna bet? I do believe that the U.S. Congress will approve the $700 plan to bail out the financial system. It has no choice, really. The financial sector had been bashed beyond recognition. Confidence is at rock bottom low. Unless the U.S. government takes serious action to boost the sector, it is now reaching dead end. The consequence of the failure in financial system is huge and wide ranging. Hence, the bailout hearing on Thursday is merely a formality. Buy some call options, my friends!

The Dow chart is probably at the beginning of a narrowing triangle. After the bailout episode is over, it may trade within the triangle range in the days ahead. Certainly, the overall tone of the market remains bearish. Many people is still feeling uncertain which will put pressure on the markets. The Dow may take another big dip before making a serious rebound in the medium term.

DJIA Daily Chart

The Russell’s chart is different from those other indexes. I have arbitrary marked the support and resistance for benchmarking the future performance as there is no meaningful area to draw the support at this time. It should continue to move in this wide trading range for the next few days, may be weeks.

RUT Daily Chart

The Nasdaq is very bearish. The support is not going to hold for long. You may consider some shorts in this index when the support is taken out.

NDX Daily Chart

 
STOCKS TO WATCH:

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