Friday, August 12, 2005
Risk remains high in the broader market and we continue to watch for a bear flag to develop followed by a leg down to support on the S&P 500 and the NASDAQ. The Dow looks to be basing at support and could surprise, quite possibly due to some of its energy stocks. We would love to be proven wrong and have the market turn higher here, but with oil continuing to push to new highs and with options expiration week next week, we are fairly confident that the market will trade sideways and then shake lower to rid it self of the last of the weak hands before it once again reverses. There were some momentum plays that came up in our scans today, so sell pressures are not heavy here. We would most likely characterize this market as having a lack of buying pressure as opposed to it undergoing smart money distribution, which was the case back in January.