Monday, July 28, 2008

Some Positives In Today's Market Decline

Since the S&P 500 Index reached 1,200 on an intraday basis on July 15th, the index pretty much ran unimpeded to 1,291 on July 24th. This 7.6% advance in a little over a week certainly warranted some consolidation. A large part of the market's advance had been due to a strong rebound in financials.

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XLF index chart July 28, 2008

As the below index chart notes, maybe this is simply a little profit taking or lightening up of positions in financials due to their recent strong performance. The shorter term index chart below seems to indicate the market is still in a small upward trend channel.

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S&P 500 index chart July 28, 2008 four months
On a longer term basis, the index remains in a downtrend; however the index could be moving to the upper resistance around 1,320.

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S&P 500 Index chart July 28, 2008 three years
Lastly, the market decline over the past four trading days has occurred on lower volume as evidenced by the second chart. Maybe this bear market is losing its legs.

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