Online Stock Trading | Fed’s inject cash into the Sub-prime mess, did it save the day or does the Storm continue to brew?

Fed’s inject cash into the Sub-prime mess, did it save the day or does the Storm continue to brew?


Filed Under Market Commentary |

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Friday’s action in the Dow left us with the market being in a correction.  The index’s lows were breached therefore killing this market rallly.  Throughout the day, banks received cash injections from the Federal Reserve to curb the impact sub-prime loan defaults.  However, by the end of the day we ended right where we started.

Again, we are seeing a market where it is difficult to gain much traction in either direction at this moment.  The downside most definitely has the edge, volume has been the indication here.  Volume over the past 3 weeks has much strength to the downside.

Taking a look at the Dow’s price movement, given it was the index that lead us into a confirmed rally last week.  You’ll notice on the P&F chart it breaking down beyond support levels. 

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The reason I am pikcing on the Dow is solely due to it being the index that had confirmed its rally coming from its lows.  In addition, the other patterns aren’t as clear as the Dow.  Mr. NASDAQ has simply not given enough of a signal with its price movement on a P&F to signal a clear direction.  However, adding volume into the picture it becomes more clear the bias remains to the downside.

Stay clear until the storm clouds move through and the sun begins to shine.

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