Tuesday, January 08, 2008

Another Down Day On Wall Street

It is an understatement to say the market seems unable to find a bottom. As the chart below shows, the market remains firmly in a downtrend and has broken through the triple bottom support. The next support level is near the March 5, 2007 close of 1,374. Although this was a quick move to the downside, volume of over 4 billion shares suggest this maybe wasn't a capitulation trading day though.

(click on graph for larger image)

S&P 500 technical chart January 8, 2008
S&P 500 stocks trading above their 50-day and 200-day moving averages are approaching oversold levels though.

(click on graph for larger image)

percentage of S&P 500 stocks trading below 50 and 200 day MA January 8, 2008
The market is approaching an oversold level when looking at the percentage of stocks trading below their 50 and 200-day moving averages. Additionally, bullish investor sentiment is at low levels. In the end, the market may be setting itself up for a bounce to the upside as we move into earnings season. As noted in the below chart for Apollo Group (APOL), the company had a positive earnings report after the close today. The stock jumped 7.8% or $5.34 in after hours trading.

Apollo after hours stock quote January 8, 2008

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