Wednesday, June 17, 2009

Stock Market Update - June 17, 2009

Strange days are indeed here. Looks like the actual money flow may be bottoming (blue lines in background) and my modified Money Flow (black line tonight) is halfway down the channel. We may see some strength. If you have shorted the market at $32.55 today ... I would raise my stops to that level if the market actually decided to move back up. Or if you believe the market will move lower into late summer or fall you can leave the stops at the original $30.99 if one desired. I not telling you what to do ... merely stating one of many possibilities one could consider. We did have another distribution day (today's price was lower than yesterday's closing on higher volume). One more item to watch for ... we did have buying on strength today for SPY the ETF for the S&P 500. This usually marks underlying commercial buying meaning that the deep pockets or big money is moving into the market and we could see some near term support. We did have an overall outflow of just under $1 billion today and the NYSE had a 68% down volume day.

I admit I really like this chart. Its best used for entry or exit points when buying or selling. The green line above is the Frye indicator which measures the cycle when price is overbought or oversold. Right now the indicator is at the bottom of the cycle which would suggest the very short term hourly price is oversold. At this point short term traders could take profits if they had shorted the market last Thursday or Friday and be ahead of the game or at a minimum place stops. This illustrates we could see some price strength over the next few days based on the indicator.
The dollar closed down today and has moved in a range as predicted this past weekend. We could see it move back the the high 70's before moving back up. If this occurs we should see strength in Gold, Silver and the Dow near term.

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