There was a whole lot of technical damage done on Thursday and Friday. Those days also provided some great trades if you were willing to go short. I think I get some kind of perverse pleasure out of shorting. I almost never look to buy stocks that are in extended slides but put a chart of a parabolic rally in front of me and I'm watching like a hawk for a chance to short it. The metals stocks provided some nice trades and I'll continue to watch them for entries after they retrace a bit.
Here's the Nasdaq which was down 4.22% this week. I guess I wasn't so far off yesterday when I said it was headed for its 200-day moving average. My guess is that the Nasdaq will hit that moving average early next week and then snap back. But I sure wouldn't be initiating any shorts after a 4% drop and with it being so close to the 200 DMA. I'd look to reload on shorts once it gets out of oversold territory.
The Nasdaq 100 (NDX / QQQQ) entered official bear territory today by dropping under its 200-day moving average. The index is now down 0.54% for 2006. That's not surprising given all those big cap tech laggards. Here's the chart:
Although the S&P 500 broke its October trendline and its 50-day moving average it's not in terrible shape. It's still well above its 200-day moving average and has yet to take out its April low.
Even the mighty small caps got hit this week. The Russell 2000 was down 5% for the week. IT took out the April low and has made a double top. Here's its proxy ETF, IWO (Update: MaoXian rightly points out that IWO is Russell Growth and that the Russell 2000 proxy is IWM. Still, the charts are very similar):
And we though our market got hit hard this week. Take a look at this Eastern Europe ETF, RNE, which was down 22% this week. Must be something specific to the way that ETF is constructed b/c another Eastern Europe ETF, TRF, was only down 11% for the week.
The banking sector ($BKX) is still in breakout territory and is well above its 50-day moving average:
The semiconductors ($SOX) were actually in positive territory for a good part of the day but ended down. With it sitting on its 200-day moving average and after 7% straight down this week I have to expect some kind of bounce. But again, after a slide like that I'd lean toward selling the rallies rather than being a buyer. (Remember, I'm talking about short term trades. It may make a lot of sense for people to initiate longer term long positions right here on the 200 DMA.)
I wasn't able to get filled on a short of TIE but its not-so-evil twin Allegheny Technologies Incorporated (ATI) worked well for me on Friday:
Whole Foods Market, Inc. (WFMI) is one of the better looking charts I see right now:
Citrix Systems (CTXS) still looks pretty good too:
MEMC Electronic Materials, Inc. (WFR) also still looks strong:
