Technical update on Morgan Stanley – update on market

If you are short Morgan Stanley or plan to be, be careful in the short-term, since the pending daily 13 may create a double bottom upleg wave short-term. Anything close to 20 is a good, shorting point again as we will drop below 10 at some point soon. The final Mitsubishi settlement Monday of next week might help to trigger a brief rally together with an overall rally next week. People are scared to hold longs over the weekend since the last few Mondays were disastrous – but for a reason since the emergency rate cut was expected, so people covered on Fridays and sold on Mondays. Now we had them and if no big bankruptcy occurs over the weekend, the coming week may play out differently. The expected intermarket divergence started and tech outperforms. The SPX was at the target almost and we will see a brief rally next week after the full scale of traders are back and no insurance went bankrupt. Today the PRU was hit hard by some panic selling. The stress in the financial sector will remain for the next 3-4 weeks basically but more so on regular banks (BKX). I heard quite some people were looking for a relief rally today. That is obviously never the time it happens and on Yom Kippur it is less likely, since we miss some substantial volume. Overall, today’s price action, especially in the NDX, is very constructive.

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~ by behindthematrix on October 9, 2008.

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