Read Larry Connors' blog – Short Term Trading Strategies
A slew of bad news rolled across the wire this morning. Home prices fell 12.7%, Countrywide Financial (CFC | Quote | Chart | News | PowerRating) reported a $893 million loss due to foreclosures and late payments, and McGraw Hill's (MHP | Quote | Chart | News | PowerRating) profits fall 44% as demand falls for credit ratings. Interestingly, MasterCard's (MA | Quote | Chart | News | PowerRating) net exploded up 85% due to greater consumer spending.
In my opinion this is not a good sign; consumers who can no longer tap their home equity have turned to plastic to finance their lifestyles providing a temporary blow off top scenario prior to the meltdown.
As you can see from the chart, MA exploded up on the announcement, but now appears to be pulling back. 250 is support per my studies. 249 would be a good place to short, should you be so inclined.
Despite the preponderance of bad news, the DJIA futures YM are still holding up nicely. Yesterday, the upper line of 12923 was tested but not broken by the system parameters, therefore the system stayed FLAT. This testing of the channel resistance level adds to the confidence of the accuracy of the channel itself. The channel of 12923-12817 is still in full effect for today.
Gold is continuing its slow grinding downtrend. Uncannily, yesterday's projected support of 877 has been tested and held as expected. Once again, when 877 snaps, it looks like a trip to 850 is imminent.
Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
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