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Nest Week: If We Clear The Recent Highs - Caution

August 8, 2008 8:37 PM

The easy money was made today. Going forward is FAR more difficult. If we sell down and NOT clear today’s high first, then the trade should be long above today’s low. If we clear today’s high first, then you better be careful. If that happens, I believe we will either reverse Monday or Tuesday, depending on whats going on and where we close.

A trader on CNBC, who likely was short today and got demolished, said that there have been 22 days in the history of the Dow of 300 plus point gains, and zero of them have been in bull markets. If that is correct, and seems reasonable, then extreme caution much higher here. I am personally VERY skeptical of the SP low. Today’s call to look for a reversal to be long was for TODAY, not long term.

I am just not certain how the dollar will impact the market. I mentioned long ago, that we have not seen a market like today - EVER - because of the plunging dollar, and wasn’t sure what to expect. I wondered if the market would be used a proxy for the dollar if the dollar saw strength. Meaning, I wondered if overseas investors would buy U.S. equities to be long the dollar. Basically, sell the same securities overseas, and go long them in our markets. I am still uncertain of this, but I do believe it played a role today. 

Written by Tom@StockBlade.com · Filed Under General Market Comments 

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