Friday, June 03, 2005

Is the Tide Finally Turning?

A weak jobs report finally knocked the strength out of all the indexes. Across the board - SPY, DIA, QQQQ, IWM - indexes sank throughout the day. Nothing dramatic, but definitely encouraging for the bears among us.

The $COMPQ (NASDAQ Composite) chart shown above has a myriad of forces that stopped the upward assault dead in its tracks. The markets are so universally high at this point, my optimism for a collapse in the market is growing again. From a seasonal perspective, markets don't tend to fall apart until September, but looking at just about every major index, I am far more inclined to bet on a drop in the market instead of a continued rise.

I've become somewhat disenchanted with the MDY and have found the IWM is a much better instrument for this kind of trading. It's far more heavily traded, and it doesn't jump around nearly as erratically as the MDY, even though a market plunge would benefit either ETF equally.

No comments: