Stock Market Analysis: 11/03/2009

I see a lot of people trying to predict the next move and where the market will be using Elliot Waves. To be honest, I’m not a Elliot Wave fan, I may post a count now and then for entertainment purpose but at the end of the day, it’s just not very useful for day-to-day trading. Indeed, it is fun to try to predict the future and everyone holds people who get it “right” in such a glamorous light but truth is no one can predict the future! Notice how every count has a backup count and an alternative count. If one doesn’t work, oh look this alternate count works. Every avenue is covered. How many times have you read a count calling a top or a bottom only to be invalidated the next day? How many people got their asses handed to them since March? Being open-minded and protecting your capital are the name of the game.

The market may be seeing a short-term bounce. The strength of the bounce could be a tell-tale of whether we will see more downside or not. A weak bounce that barely reaches 1050 could be a signal that more distribution is ahead. However, if we see signs of heavy short-covering over more than a few hours, that could point to a retest of the highs.  Bears are hoping for a shallow retracement to load up and take it down while bulls are cautiously hoping a bottom has been put in and news highs are on the horizon. Tomorrow is FOMC day and on Friday, we have unemployment data coming out. Expect light trading after the open until 2:15PM ET, there should not be any big surprise. At this point and until proven otherwise, I am still short-term bearish and looking to short into a rally, intermediate-term bullish (until SPY 102 is broken convincingly) and very-short-term bullish (some type of bounce).

Economic Data:

• Today: Factory orders 0.9% vs 1.1% expected
• Wednesday: ADP Non-Farm Employment Change (-188K), ISM Non-Manufacturing PMI (51.6), FOMC Statement

Evening Reading:

• HGSI (SMB)
• RIMM (SMB)
• British break up several bailed out banks, why can’t we do that?? (Washington Post)
• Feel sorry for Jim Cramer’s followers? (The Davian Letter): Love the picture of Cramer next to the words “CIT primed for upside”
• Bill Black on CIT (The Housing Time Bomb)

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