Saturday, August 04, 2007

Free Fall Friday

Heavy selling in the financial sector prompted by a Bear Stearns warning and a poor jobs report drove the markets down in the afternoon session and the usual selling crescendo in the last hour.
The Qs are not oversold at this level and 46.50 looks like the next support.
The VIX has bounced off the 10 DMSA and is headed higher through the upper band and it is not overbought at this level , even after making a new closing high.
The XLFs are suffering the most and the cross of the 50/200 DMSA is a negative sign, coupled with the technicals which indicate XLF is not oversold yet.
The market makers are really having a a field day with the high volatility . . . put spreads, normally seen at .05 are now running .20-.30. Placing limit orders based on intrinsic value is a very risky game at this point with the markets moving so fast and the risk factor is greatly increased by trading wide spread market orders. Not a happy situation.

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