As we noted yesterday, the market’s inability to close strongly above the 40 & 50-Day MA’s yesterday did not bode well for continued strength… and with all closing back below their 40-Day MA’s today, we remain cautious about the ST outlook.
However, with quite a bit of recent strength, if there is a bailout plan announced in the next couple of days for the auto companies, we may see a rally that could carry the averages back above the daily trend resistance. Most importantly, a weekly close above the 50-Day MA.
Beyond managing our hedges and following the action in RMBS closely, we don’t anticipate any new entries unless there is a strong rally into the year’s end. Many stocks, especially dividend paying stocks, are beginning to look good from a reversal perspective and we will be noting many of those over the next few days, especially if any of them offer good setups for new entry or add-on. Otherwise, we will be happy to wait for the new year to see if the market can make a good start to 2009.
