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Even though President Obama signed the stimulus plan into law, the economic worries just seemed to be overwhelming for the markets right now. Chrysler requested an addition $5 billion while GM said it may need another $30 billion! Financials led the decline again: GS -11.14%, WFC -13.13%; MS -13.82%; JPM -12.31%. Crude oil traded down to $35/barrel. Gold jumped above $970/ounce!
Last night, in my Sector Watch, I pointed out that USO (oil) still looks bearish and could break down further:
“USO made a new all-time low last week, closing below $26. It is still very weak and is sliding deeper into its bearish formation. We could see some of the energy stocks finally breaking down. For instance, both XOM and CVX have been trading in a tight range and really have not fallen much comparing to the rest of the market.”
USO continued to make fresh lows today, tumbling 8.36%, closing at $23.46! XOM and CVX, which had been holding up pretty well, broke their supports. XOM was down 4.44% and closed at $71.28; it had been able to hold above $74 since December ‘08. CVX lost 5.09%, closing at $66.18; it held above $68 for the past 3 months.
With energy and financial stocks being bombarded, nothing much (besides gold) could get things going. Ultrashort ETFs were flying higher!! SRS added +13.1%; SKF gained +16.2%; and, EEV was +15.48% higher. We did a small trade on SKF calls and already locked in a +30% gain.
The Dow was down 297.81 points; SPX lost 37.67 points; Nasdaq fell 63.7 points:
XLF (financials) slumped nearly 10%! XME (metals and mining) lost 9.44%. OIH (oil services) followed closely behind, dropping 8.4%; while USO (oil) fell 8.36%. GLD (gold) and SLV (silver) were both higher by more than +3%. GDX (gold miners) added +3.7%. FXI (Chinese ADRs) gave up 7.12%.
SPX
SPX lost 37.67 points to close at 789.17. It caught the daily lower BB. The daily MAs and MACD curved down.
Nasdaq
Nasdaq fell 63.7 points to close at 1470.66. It closed below its daily MAs. Its MACD was lower.
The market is looking very vulnerable again! VIX jumped +13.35% today, although 50 seemed to be a resistance for now. SPX crashed down to its daily lower BB, and, its MACD is showing a new bearish crossover. XLF (financials) closed at a fresh new low, below $8, at $7.97. The Dow is only 100 points away from the intraday low set in November 2008. We traded lightly on the “short side” today. The market is testing the bottom and any bounces could be very violent. So, we’ll take the gains on the short side as the market continues to slide, while keep lots of cash and stay ready if the market bounces. Also, remember, this week is options expiration week. So, we may start to see manipulations starting tomorrow, given that Monday was a holiday and tomorrow is already Wednesday.
Good night and HappyTrading! ™
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