Stocks Fade Late, Close Flat

Monday, March 16, 2009

Fundamental Take:
Stocks started higher off the open as Federal Reserve Chairman Ben Bernanke said he believes the recession may end in 2009 while Barclays reported a strong start to the year echoing Citigroup, JP Morgan and Bank of America's comments from last week. Stocks ended mixed with the Dow closing down 7 points in a day lacking major headlines. Government officials continue to give press conferences throughout the day but they are met with yawns from the market tired of hearing the same rhetoric over and over.

Technical Take:

The market gapped up and traded 170 points higher by midday. The S&P 500 double topped just before two o'clock and sellers stepped in against the highs looking for the rally of the last five days to lose steam. The short against highs was profitable as the market fell into negative territory by the close. The spectacular momentum in the financial sector last week slowed today and the market likewise slowed. Today likely marks the short-term top of this recent rally totaling nearly 1,000 points in the Dow from the new bear market lows of 6,440 to today's highs of 7,392. Now begins the process of measuring the pull-in and the depth of consolidation needed. Given the strength of the rally and the leadership of the financial sector in the move, I would expect the market to hold 50% of the move with a level at 7,000 as technical support.


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