The Nasdaq 100 (^NDX) reversed sharply on Friday after piercing through, in early trading, the indicated chart resistance. Along with the rest of the market, the index succumbed to the tendency which highlights the current market predicament of rallies being seen as providing an opportunity for fund managers to liquidate long positions and better entry possibilities for traders that want to exploit the short side again.

The 1900 level represents a major hurdle on the upside, but I sense we may go down today to test the lows again before there is any appetite for looking at overhead barriers.

Among the many things that the market has to contend with this week are the FOMC deliberations, Friday's employment data, the fate of the so-called monoline insurers, further negative earnings, etc., and of course whether we get any new financial accidents a la SocGen. Despite all of the protestations about the soundness of the fundamentals - "It's the financial system, stupid."



The banking index (^BKX) just made it to the 90 level on Friday where, as expected, there was very firm resistance. As the chart reveals, the sector has a formidable obstacle to clear, and despite all of the positive rhetoric that is starting to surface about how bargains abound among the regional and relatively well capitalized banks, there is still too much financial uncertainty for anyone to claim that a meaningful bottom is in place.



We made money on both sides of the market last week with CYMI which reversed in Friday's trading as anticipated.



The chart for Goldman Sachs (GS) has an evening star candlestick which on a statistical basis has been a reliably bearish pattern.



Valero (VLO) looks vulnerable at current levels and even more so as it gets closer to $60.



The chart for Capital One Financial (COF) highlights the hurdle that many companies face in the financial services sector.



Career Education Corp (CECO) is developing a well-defined bear flag formation.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market. He specializes in market neutral investing and and is currently working on a book about the benefits of trading with long/short strategies, which is scheduled for publication later this year.

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