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Monday, December 29, 2008

Holding The Line

Another low volume holiday trading session with a lot of technical testing. 857 seems to be the line being defended now, as it was tested twice today. The 50dma is the upper line of resistance, and we didn't come close to it today. Energy was where the strength was today, and with tensions in the middle East re-igniting, oil will probably rebound. Basic materials took a big hit on news that a $17 billion deal for Dow Chemical in Kuwait has fallen through, and that affected Dow's impending acquisition of ROH, which took a huge hit.

The Nasdaq line of defense looks like 1493, which was the low today. The Nasdaq got a late rally that was much weaker than the one in the SPX. As I've pojnted out ad nauseum, for most of this year the market is in a downtrend when the Nasdaq lags the NYSE composite.

The Russell 2000 bounced right off the 50dma and headed lower. It's low today was 461, and that may be the level of support here. With light holiday trading, I expect a lot of head-fake moves, so I wouldn't jump into short positions if any of these levels are broken.

Gold and silver miners started outperforming the overall market back in October, and if they can break through resistance here, there is a very good chance of testing the 200dma.

XOI is (i believe) oil producers. This looks a lot like the chart for XLE, and despite a seemingly weak move up, is significantly outperforming the SPX, although the relative strength line shows signs of weakening.

OSX is oil services, and is not performing terribly well. Apparently low oil prices have hit this sector harder than oil producers, probably due to cancelled drilling projects. I will see if I can find the components of these two indexes and find out what is going on.

On the earnings sheet, RICK reported after hours. It is trading down 7% in after hours trading. I think they should change the name to Rick's Cabaret and Bank Holding Company, and get some TARP funds.

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