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Last weekend, I wrote:
“For the new week, we are again at the options expiration week. Volatility will likely be a given. The daily MAs are heading lower again, with a new bearish formation developing. If the market goes below the recent lows again (SPX 850; Nasdaq 1500), they may not hold this time. The market has also not been able to go above the 30-day MA since the start of this downtrend in September. Any bullish movements will be hard to sustain, unless the market can go above the 30-day MA.”
On Monday, the market tested the support levels (SPX 850; Nasdaq 1500). On Tuesday, the support levels broke down. Then, the market just continued to tumble. On Friday, the market slid lower but bounced in the last hour, as Timothy Geithner, president of the New York Federal Reserve bank, was thought to be named by President-elect Obama as Treasury Secretary. Nevertheless, the market still closed down for the week: the Dow lost 450.89 points; SPX fell 73.26 points; Nasdaq tumbled 132.5 points.
This weekend, leaders around the world continue to make plans to solve the global financial crisis. In the US, Citigroup (C) and the automakers are working with our government on rescue plans. Let’s take a look at the charts to see where the market stands after Friday’s bounce in the last hour:
SPX
On Friday, SPX jumped +47.59 points to close at 800.03. It tested 750 and bounced back. The MACD flattened.
Nasdaq
Nasdaq added +68.23 points to close at 1384.35. It tested 1300 and bounced back. MACD was slightly lower.
The bounce on Friday was suspicious, to say the least. The market hung around the new support levels (SPX 750; Nasdaq 1300) all day and jumped in the last hour. Was that really just because Geithner was to be named Treasury Secretary, or was that OPEX (options expiration) manipulation? My guess is the latter. The market just needed an excuse for those that were looking for reasons. In any case, did that bounce make a big difference in the charts?…
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