2009-11-06

Last week, the major concern was whether the market can keep its current trend. The market has answered with somewhat muted voice. The DOW, the SP 500 have not violated their last lows.  Only NASDAQ 100 did by a tad.  That was good.  The problem is the volumn. The last two sessions, we saw DOW/SP500 come out of their lows with below average volumns.

Another notable was RUSSEL 2000 (small cap) and NASDAQ 100 were the laggards. Does this mean the lack of risk appetite for the investors? if that is indeed the case, we cannot be too optimistic.

DOW transportation has not formed a double top formation thanks to Warren Buffet.  If it slice through its 50 days MA, that will provide some support for the market overall.

So, in short, we hope that the small cap and transportation can join the rally next week. otherwise, we could see another round selloffs.

It seems that the market has ebbed and flowed in a two weeks' cycle.  if we consider the recent pull off from lows of DOW/SP500 a continuation with the same cycle, we may see another week's rise in the next week.  especially before Wednesday.

The holiday season pattern may lend some credibility to this two week cycle theory.   we may see yet another down cycle until before thanksgiving, then, the market take off.   of course, only a prophet can know and an Oracle can tell that far into the time.



So, the action is to watch russel 2000/NSDAQ 100 and DOW transportation next week.  be alert after Wednesday.