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Wednesday, May 13, 2009

Green Shoots? not in Retail

Retail sales came in this morning and were "worse than expected". Expected by whom? All you have to do is sit in a shopping center for a while and watch the lack of traffic coming through.
The market apparently didn't like it, because it dropped early and never managed a decent rally attempt. I mentioned 898 as an important support point, and that got broken about halfway through the day. The good news? Low volume again, so no distribution day. 877, once stiff resistance, is now support, and below that, 857 is the "line of death."

The Nasdaq took it on the chine with a gap down, but also on low volume. The good news is that price relative has not broke down through it's previous low; the bad news is that there isn't much support above 1598.

The price relative on the Russell 2000 did break through it's previous low, and I did mention that if you were going to go short, this would be the place to do it. We appear to be heading for the 50dma, and could hit it as early as tomorrow.

30-35 has been resistance in the past on the VIX, and was just recently tested for the first time as support. I suspect we will have a test of the 50dma soon, and the 200dma after that.

I mentioned this morning that small cap oil stocks have been showing signs of life lately, and this morning that continued, but then the pulled in sharply. The Amex XOI index hit some heavy resistance at the 200dma. 919 is an important level here, if it bounces off then the oil stocks should start moving again, if not than my thesis of oil stocks moving up is wrong.

With the low volume, we still can't draw a conclusion about whether this is a small pullback in a bull move up, or a reversal after a top. I'm not going to come to any conclusions until a) I see a lot of green on the screen, or b) the red continues and volume picks up. However, I have exited all long positions and wm going to wait for another chance to re-enter.

As usual, Wednesday night is rushed for me, but I should have the new highs update at the usual time.

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