The big news today was oil
set another record. At some point, traders will notice this fact and start to send the market lower. However, so far everybody is betting on the "Don't fight the Fed" trade. I first learned about this trade from
Martin Zweig. Basically, whenever the Fed cuts rates buy stocks because lower interest rates is usually an economic stimulus. We also learned that Microsoft (also referred to as the evil empire)
ventured back into the Yahoo! waters today. We also learned the
leading indicators rose for the second straight month. It seems the big news today was from
Sandisk who announced that consumer demand was soft. This was big news because Sandisk is the largest maker of flash memory cards. So -- let's see what the charts say:
On the 5-day SPY chart, notice the following:
-- The uptrend is still very much intact
-- Notice there were some very large high-volume spikes in today's trading
-- Today's sell-off can be seen as a simple profit taking move rather than a "it's time to get the hell out of the market" play.
On the QQQQ chart, notice the following:
-- Today's sell-off was big and on high volume
-- Today's sell-off also broke a two day uptrend that started at the beginning of Thursday's trading
-- Also note the price action hit the long-term upward sloping line and moved higher. In other words, there are still buyers in the market.
On the IWMs, notice that all we have is a simple trading range as traders try and figure out the next move.
