Stock Market Update - June 19, 2009

This is going to be interesting to see how this is going to turn out. Money flow (blue line) looks to be bottoming and this should add some near term support to the market. However, the Dollar basically had a consolidation week and moved sideways and the indicators are still pointing to a move up. We did have one of the largest volume days so far in CY09 Friday with over 2 billion shares traded on the NYSE (largest since March) and we did have a volume up day with 63% of shares traded. Friday marked another large day ... cash inflows ... one of the largest I've seen since I've been following the cash inflows. The two winning sectors were Financials and Technology. Also, something else to note we did have buying on weakness with the ETF for the S&P 500 SPY of over $141 million. I wonder if this means something with all this volume and money flow or are the commercial mutual funds dressing things up for the end of the quarter reporting.

Here is an hourly chart of the Dow. This looks for the near term to show some support for the market. The green line above is showing near term support for prices. The red line is a modified Tick data indicator that measures the near term tick movement (this is showing some near term support). So with the money flow line on the daily chart bottoming and the green line (price indicator) on the hourly chart ... we may see some price support early this next week if the Dollar cooperates. Let me say that again ... if the Dollar cooperates by moving sideways or actually moving down. Stay on your toes as things can change.

I did want to address the QID buy signal I gave last week. Based on the indicators it looked to be a safe trade and it was to this point. We did have a move up from $32.55 - $32.62 and I noted that you needed to move your stops up to protect any downside movement and keep them tight. If you followed this ... you were stopped out on Friday. But that is ok ... the worst you should have done is break even including your brokerage commission or at a minimum been out $20 on brokerage commissions. Perhaps the safer play will be to watch the market and decide if we are going to have a more meaningful decline once this move up is finished and we can look to short the market with QID or TZA. I would be looking to buy QID around the $30 to $31 range and buy TZA around the $19 to $21 area. But we will need to see how the market is behaving first before we initiate any buys over the next few days/weeks.

I also wanted to point out that the High Yielding Debt Market looks to be back on track. Another supporting case for the overall market.

As expected for the week the Dollar moved sideways. Based on the green line above which is an indicator for price ... the Dollar looks to have some support and the bias would be up.

A note of caution ... the Transports did not confirm the recent highs of the other indexes over the last few weeks. It is important for this index to mark new highs when/if the other indexes move onto new highs over the next few days and weeks. The reason is I doubt the rally is for real if it doesn't and the market is at risk of any further price gains. It just worries me a bit when one of the largest transportation companies would not give any guidance for the new year coming (FedEx). Based on the indicators we may have some very near term support in the few days ahead.