Wall Street Buddha

Market Perspective/What to watch/Possible major moves April 18, 2010

Friday morning the SEC commanded Goldman to bend over and assume the position. Emotions ran out of control sending the indexes to correct 1%. Huge volume, volatility spiked on the VIX.  It is times like this that I look at the market in general to determine where it may be headed. Today I checked out one of my favorite sites, www.barchart. com. Specifically I look at the “Price Volume List” showing where all the action in the market was. I’ll grab this list to watch, analyze, draw trendlines, and anticipate future breakouts.  Just by sorting the list in order from gainers to losers, it is obvious that the selloff in the indexed is highly concentrated in the financial sector.  Names like Goldman, Citi, JPMorganChase, Bank of America are the losers. The whole suit against Goldman brings into question of the health of the economy and the banking sector in general. Maybe the recovery isnt over. I’m looking for a possible catastrophic collapse of the financial sector once again. Who knows. You can only speculate. So just incase, I’ll keep an eye on the banks.   Critical Support and Resistance levels are drawn on the chart below.

I could have charted the other banks, but because sectors are correlated, the charts are essentially the same. You only need to chart one of the stocks, BAC is charted below. When alerts get hit just look for confirmation later in the other banks’ charts later.

You can see that BAC has been flat between the yellow trendlines. When the stock trades outside of the yellow range I will initiate a position in that direction.

Good luck.