Market Comment 12/27/06

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TradeStalker's

R.B.I. Trader's Update

12/ 27 / 2006

(Published Since 1996)
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Dateline: 7:11 pm Eastern time, 12/27/2006

The market gapped up on Wednesday's open and kept going for
about 25 minutes. The move stalled and reversed, but the
selloff wasn't very sharp except for the Nasdaq futures. The
market turned itself around and moved back to test the
highs, then things quieted down for awhile. Just before 2pm
the market got going on the upside, and the rally took the
market to the 1438.75 level on the SP futures and 1784.50
level on the Nasdaq futures.Those highs were sold after
stocks closed as the futures sold off into settlement.

Up until late Wednesday, the market had a bullish tone and
buyers were in control. The move off of the Friday lows is
now getting a little bit ragged. At this point, a nice
little shakeout shouldn't be too far away. The Nasdaq is
still acting tired, and unable to match the good move in the
blue chips. The Dow set another record high print, and
closing high on Wednesday. Meanwhile, the SP500 closed just
below its 12-15 high. The Nasdaq 100 closed 56 points below
its 11-22 closing high. The daily internal gauges are
nowhere near their corresponding highs, and that leaves us
with bearish divergences. On top of that, the RBI Sell gate
is now open. The RBI Buy gate was open at Friday's close,
and that helped lift the market. Now that we're coming in to
good overhead resistance, the open sell gate should help
hold prices back.

We get the Consumer Confidence number at 10am on Thursday.
It looks like the initial resistance areas should be a lid
on Thursday, as they were at resistance areas and rejected.
The market will be a short unless those areas are cleared,
and then can hold on a pullback.

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Good Trading,
Mike Reed