Trades and Weekly Market Forecast 2/2/2009
OptionSpreadTrades.com Weekly Forecast
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Market Trend
The market trend is still down from the sell signal that we got on the weekly chart at 852 on 1/14. The stochastics are still turned down, but we did get a pop up over the zero line on the momentum indicator. With a slew of bad earnings and news that came out this week we think it's only a matter of time before we break the November 2008 lows of 737.50.
Commercial Traders Not much has changed with the commercials this week. They are still short and the long speculators have stopped buying the market.
Seasonal Tendencies
We did get a pop up this week and this is likely due in part to the strong seasonal tendency for the markets to rally toward the end of January as company's start to put their capital back to work. Also we probably saw a fair bit of short covering, where traders who are short selling the market get stopped out of their positions, which temporarily creates a market rally. However the end of month seasonal tendency to rally ends on Tuesday, so with any luck we'll see the markets continue to drop. Monday is typically bullish with the S&P up 61% of the time with the DOW and the S&P up 6 in a row and 8 of the last 9 years.
Forecast
We do expect some bullishness at the beginning of this week with the big drops that we saw from last week. However this shouldn't last long and we believe that the trend down will resume.
