Monday, June 12, 2006
We expect to see a bit more weakness over the next week as the market continues to work on a bottoming process. The danger of the market moving much lower than Thursday's low is minimal at best. Don't expect the market to carve out a "V-type" bottom and go straight back up here, but don't look for a breakdown either. Looking at the majority of stocks, which are in trendless conditions right now, we wouldn't be a bit surprised if they manipulated the market back down to Thursday's lows this week to see if they can shake loose a few more shares from the weak hands tree. Keep an eye on the overseas markets this week; especially the British and Australian markets. Both markets are very close to a bottom and any strength in these markets should trigger short covering and will give the bulls back their lost confidence. Meanwhile, try to avoid the broader market and focus on stocks that are trading somewhat independently.