Momentum Trader Report: 08/14/08

There was some bad news to start the trading day, which included a higher inflation. But lower energy prices gav reason to believe that we may be near the inflationary top. The market seems to believe that the worst may be behind us in the Financial sector as well. We saw this kind of positive response to bad news in April, which lead to a sustained rally before the market went into a correction in May.

There was one trigger from the Watchlist. It was WAB. It broke out on low volume, which was a sign that it wasn’t time to buy this stock, and it closed below the entry point.

I am keeping it on the Watchlist, in case it decides to move again on heavier volume.

As mentioned in last nights post, the S&P 500 was sitting at a trendline yesterday, and todays action sent it higher, which could be a positive sign in the near term.

However, this weekly chart of the S&P 500 shows that it’s near the 200-Day SMA. Notice how the index reacted when it rallied to the 50-Day in May. It hit the 50-Day then made a steep decline.

Trade Ideas for 08/15/08:

Good luck and good trading!