Pimp My Trade

May 6 Market Wrap

Posted on May 6, 2009 by Adam

Good Afternoon traders,

The market recovered from what should have been bad news, with the Bank of America warnings that surfaced last night. Excellent payroll numbers this morning skyrocketed futures higher. The market was hestitant, however, to move higher during the day. The S&P spent most of its time whipping around between 900-915 or so before breaking out of a nice consolidation pattern.

The market continues to show strength, with resistance overhead at 935.

There doesn’t appear to be much resistance overhead until we reach 935, which corresponds with the January high and the Bullish Price Objective from our point and figure chart. That’s not to say we can’t pull back to retest both the intermediate trendline that’s been building, and the 875-900 support zone.

If we get a succesful retest I will be looking to extend my long positions.

Overbought sectors like Technology and Consumer Discretionary traded very heavily on the day, finishing in the red. I’m exposed to a couple retail names (both long and short), and some technology plays, so I will be watching those carefully. Money seems to be rotating out of those areas and into materials and financials, which led the broader market higher. Here’s a look at market breadth for the day. Notice the wide discrepancy among sectors.

Financials and materials led the way higher, but everything else seemed to drag its feet.