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Friday, February 13, 2009

Thursday Stick Save

The market today flirted with all out collapse. Lets take a closer look, shall we? In the past posts I used the DOW as an example, today I'll use S&P 500. Its basically the same story, but S&P is what I was looking at today.

Lets look at the index for S&P 500. First lets look at historical support for SPX. since 86, its "about" 800. With freefall down to 400 if 800 is broken with conviction.

In the "recent" history, basically fall of 08 to today, the support level was about 805, with next stop at 750, then freefall. So if 805 was broken through today, really only one more support level until freefall down. See diagram:

So lets take a look at the action during 9:30 am to 4:00 pm today. Notice, the SPX hit 408 and then the White House issued a press release to spend money to help the mortgage situation.
Coincidence? If you where CEO of a company and pulled the same stunt with your companies stock, chance are you would be brought up for stock manipulation.
Do I care this stunt was pulled? Yea, from the point of view of people losing faith in the "big people" manipulating markets. But my personal account was helped,but I'm about 1/3 in cash now, so its all good. The white house announced U.S. Housing Plan to Fund Interest-Rate Reductions.
I'm not going to dive into the news report since, it really doesn't matter. Anything but cleaning up the accounting and properly valuing companies is just smoke screens.

What matter is, will the market continue momentum at the open Friday, and gain steam into the close? This weekend is a 3 day weekend, which then leads into a short week, and options expiration on Friday.

So if we open up, and can hold it first couple hours, looking like a good entry point on the long side.

Gold and GDX where ROCKS today, barely giving up any gains, and quickly recovering after the news is released. GDX likely to go to 40-45 now. If we open with any sort of strength in the AM, I may add to my GDX. See Mish's blog entry on "You can't fool gold".

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