RSSPullback or Correction?
By Jim Farrish | August 19, 2008 | 8:53 AM | 0 Comments
Freddie and Fannie were blamed for the selling yesterday putting pressure on financials. The concern over the government stepping in to control the companies prompted selling in both along with the brokers and banks. This activity pushed the financial sector to short term support at the 349 on the index. The banking sector is near support at 300 and brokers fell to support at 145. Is this a pullback in the short term uptrend off the lows or is the correction back in play? There is plenty going on outside the sector with the Fed, Congress and Wall Street. The underlying issue of credit risk remains in play and that isn’t going away any time soon. However, the mending process has begun. This leads me to believe a pullback is in play more than a further correction for the sector. There could be a test of the July low or we may trade in a range short term, either way the opportunity here is to be patient and take advantage of the outcome. (NYSE: IYF) shows support at $67 short term. Support for (NYSE: KBE), the bank ETF, is $29.54. Watch and see how this plays out.
Commodities moved higher yesterday gaining some interest from investors. Bottom watching is making this one of the most talked about sectors of late. DJP iPath (NYSE: ETN) Commodity shows support at the $56.66 mark and could give some clues as to direction. (NYSE: GSG) iShares GSCI Commodity ETF is above support at $55.31 and building a base near the $58 mark. Both could give some short term for clues in direction. Money flow has picked up but volume is below average. Be patient in building any positions. Make sure you have a strategy in place prior to putting anything in play.
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