4 Minute Trader for 7/6/2010

Actions to take:  None

Trend: Short (sell) 

SH close today:  55.09

Stop price on SH:  50.68

401K: 100% cash 

Comments:

I don’t know how many of you guys follow the market during the day.  The SPX traded as high as 1042 and finished at 1028.  It had a nice bounce in the last hour after going negative.

It needs to close above 1040 for the bulls to get some type of breather.

I’ll send you a new password at the end of the week.

See you Thursday.

– Doug

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Chart of The Day

Bonds (those tied to treasury yields anyway) continue to work provided the 10 year closes under 4.0% and more importantly under 4.25%.   Significantly below that at this point.  Today’s close 2.94%.

Three months ago (Chart of The Day) we saw the 10 trade above 4.0% intraday but closed at 3.99.  Since the 10 closed below 4.0 there was no reason to exit.  Deflation before inflation?  So says the chart at this point and if so that spells trouble for the equity markets.

Now for  the chart.  Rates could certainly drop lower based on what I see technically.  Resistance is at 3.25 and then 3.5%.   Looking at a monthly chart, 2.65 may be achieved soon.

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No change in thought on the INDU.  Due for a rally, but 9500 looks highly probable (see Monthly below).

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Enjoy your night.

– Doug

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Chart of The Day

GLD closed below the 50 day and near term support levels today.   More support is at 115.   If not out with stop yet I would place stop 4 ticks under today’s low.   You can always get back in.

GDX looks like it wants to test 48.  It to closed below the 50 day today.   Both sold off on huge volume.

In 2008 GLD dropped 32% in 8 months.  This is why nothing is a buy and hold.  At some point down the road, bonds will take a beating too.

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 I think the Dow will rally soon (due for a bounce and short covering).  It might have to see 9500 first.  Jobs out tomorrow ahead of a three day weekend.  10K is now resistance.

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Quote of the Day

“Make each day useful and cheerful and prove that you know the worth of time by employing it well. Then youth will be happy, old age without regret and life a beautiful success.

“Louisa May Alcott
1832-1888, Author

Chart of The Day

As promised we’ll continue to track Gold (GLD).  It broke its short trend line and bounced off of support yesterday.

It is also trading above the 50 day.  I’m out on the balance w/ a close below 118.50.   Would not add below 123.13.

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INDU

The Dow traded below it’s 6/8  low today but closed just above it.  It held support.  Anything can happen Friday with Jobs.   Even if we rally for a spell, 9500 looks like a gimmie soon.

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Quote of the Day

“Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not.”

Thomas Huxley
1825-1895, Biologist and Educator

Chart of The Day

The market looks bad.  The big three and now the Russell have closed below the 20, 50 and 200 day moving averages on an increase in volume.  Support was also broken.

Certainly the market could bounce to now fill upside gaps.  Jobs on Friday and earnings next week could help too.

However, major technical damage has been done since the break of 1150 on the S&P and 10,500 on the INDU.

Let’s talk the Dow.   I would not feel like a long term bull until the Dow closed above 10,730. 

Forgetting the noise and just looking at a chart,  9,000 (support) looks highly probable to me.

There will be some false starts and signs of hope.  But again, until and if we get above the left shoulder of 10,730,  I would be a nervous bull.

For now I see lower highs and lower lows.

In the meantime we maintain discipline and take each trend and exercise every stop because no one really knows how long the trend will last.  A game of probabilities and not certainties.

Have a good Wednesday.

– Doug

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Welcome fellow traders and investors!

As Money Managers and Traders, the mission of our Blog and Radio Show is to go on record and further educate our readers and listeners in technical analysis and proper money management across all asset classes.

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To Your Success,

Doug & Gary