Saturday, November 21, 2009

Stock Market - What To Expect This Week

An interesting pattern has been developing over the past few months in the stock market which I'd like to share with you. You'll notice in the above chart of the S&P that there has been a tendency for stocks to sell off towards the end of the month and then rally at the beginning of the month.

What I find interesting is that each of the sell offs have been gaining downside momentum. In other words, each down move has been larger than the previous month's down move. Having said that, if the pattern continues to work, stocks could be in for a very negative week as we close out the month. As always, there are no sure things in the market so lets just see what happens.


ben said...

But Thanksgiving week normally
has upward bias if you look
at the SPX price action for
the last 10 years. Even the
bear market year of 2008
SPX has been up 5 days in a roll.
I think next week there will be
little volume and someone can just
artificially push the price up
to trap the bears. After the
new year, I think that's when the
true color of the market will show.

Kevin said...

Hey Ben,

Yes that is true about Thanksgiving. It will be interesting to see who has control over the market this coming week, the bulls or the bears.

Lee said...

They will push it up just to make the news positive so people will shop.....Smoke and Mirrors.

BTW Kevin, you are a great trader and I enjoy and speak of your blog to my circle of people.....Have a great holiday.

Kevin said...

Thanks Lee, same to you.

getyourselfconnected said...

I should think volume on the short week will be ultra low, and this favors a move up so this week may not fit the trend you identified, but I agree about the trend in general.

Frank said...


I went short too, any advice on where to put the stop?

Thanks and keep up with the excellent posts and analysis.

Kevin said...

Depends what you shorted Frank, but I have my stops above last week's high. No reason to fight the market if last week's highs are taken out.

frank said...

That would be about 1114 on the S and P.

good luck.

Kevin said...

Frank, I'm not short the S&P..I have some homebuilders, small caps and transports short...My stop is based on last week's high for those stocks, not the S&P. Good luck to you as well.

Anonymous said...

The DOW made a new high but the SPX and NDX didn't. The DOW is the easiest to "manage" of all the major indices. The USD is also still above its recent low. For me this is a sign that the trend is about to reverse. If the USD stays above its recent low then we're about to see a major reversal that may last a few months.


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