Nightly Update:06-10-08

Hi Everyone,

From Monday's Report:

If we see early weakness-I would expect the Bulls to step in at some point-to hold things up...a test of today's lows may also come into play-but the markets should hold and head to our upside targets. 

This is exactly what took place today-a gap lower, where the "smart money" was found on the buy side again-then a push higher. Our upside targets are in question-but not dead yet. With the bulls holding the markets above yesterdays lows-then turning the Nasdaq green-I would have expected a better outcome at the sound of the bell.

With the modestly lower close, one would have to give the day to the Bulls-but question why they couldn't keep the momo going, when they finally had the Nasdaq green today. Maybe the bulls just don't have their legs back and the bears are full-and we go into a whole lot of nothing phase-or consolidation. If that does take place, I would definitely have to walk the long side with extreme caution.

At the close of today, we can build a solid case for the perma bulls and perma bears. I am leaning on the side of the bears for the upcoming weeks, where lower levels should by seen. But I am still on the side-that the bulls still have one more leg up..maybe to my upside targets :) 

We were stopped out of the QLD trade at entry-and it very well may head to target-but it was just too much work and the risk reward was starting to slide on us. No damage was done and our SSO trade is still open-with a stop at entry also.

"Smart money" was on both sides today-holding the markets up on the dips and quick to sell the rallies. We often see this during consolidation periods-where the markets pause, before it resumes the trend-which is to the downside. But that could all change in a moments notice-as we have become accustomed to the chaos and confusion tape.

The Fed releases the beige book at 2:00-which should give the markets an excuse to pick a direction. The Dow has been the glue, holding these markets up-but it's starting to feel the pain of this responsibilty-with a bearish divergence starting to form on the 15 minute charts. If the Dow fails here-will the Bulls trust the wobbly knees of the Nasdaq to hold  the indexes up? We should find out soon enough-but the Bulls better take the Nasdaq away from these levels-soon, if they want this to take place.

For Wednesday: Probably best to keep your powder dry. If we get early strength-pay attention to our pivot levels. If they hold the indexes down-the start of the next leg lower-may be on the way. It is still way to early to stamp the charts with  bear claw or a bulls head- so lets see what takes place on Wednesday. If we start to see any type of divergence form-we will be quick to jump back into a trade. For now, don't force feed a trade-just to be in the game.

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Good Night!

Gary

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