Consolidation and then Some

July 20, 2006 · Print This Article

Was yesterday a fakeout? Well the Nasdaq gave back all the gains from yesterday and the Dow and S&P gave up roughly 50%. By the looks of todays action the answer is leaning towards, I hate to say it, yes. Although, I am not going to give up hope just yet as there is still some hope of a sustainable move higher if we can hold up tomorrow and Monday. We are entering some fairly strong seasonal weakness over the next few days so if the market, namely the Nasdaq, can hold here or move higher than I feel another short-term rally is in the cards.

As I write this the futures are up, but we all know how quickly that can change by the opening bell tomorrow. Both Google and Microsoft are higher after their earnings release and ahve managed to move the futures higher. Hopefully, this is the kick in the pants that the poorly performing tech sector needs for a sustainable (or at least a short-term) move higher. I would have preferred to see the Nasdaq consolidate today (which looked highly possible through mid-day) but the bulls did not display any conviction after yesterday’s bounce. How the market performs over the next few days should give us some decent clues as to where we are headed over the coming days and weeks so be nimble.

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