The stock market opened down with uncertainty over the stimulus plan, the undisclosed contents of the plan and whether it gets through on time to do any help. That’s what the talking heads were saying today so that is what the market has to worry about now. It is likely that the stimulus bill may have delay in getting through Congress and there is growing distrust that it is constructed correctly to help. Since late August of last summer, the market has had non-stop topics to worry about so fear is still dominating investors’ minds.

The Dow30 looks like it is trying to swim in quicksand and the likely direction is down. Until there is a “coast is clear” sign, the market won’t make huge upside moves but if we get some further selling, which is what we want, we could easily get a strong countertrend rally that gives 15-30% moves on some stocks, particularly some of the banking stocks.Things become easier once you know how to read stock charts.

The Nasdaq tech stocks tried to bring the market up with MSFT, AMZN, CSCO,

Again, to repeat the theme of the last few newsletters, the ideal situation is we have a big drop with the volatility index spiking for a few days and stock prices dropping like we saw November 19th and 20th. It doesn’t have to be that extreme in order to see a high probability set-up but the odds would be higher to see a stronger bounce.

This is when it takes a lot of patience and discipline to sit on the sidelines and not get tempted to do anything bad for your account balance. It shouldn’t take long before we see some good opportunities and this is a good time to watch, wait and scan for good opportunities.

More down days in oil are ahead but should take a period of weeks before it completes a bottoming process. We are looking for $35 to be a support level but it is likely to move up before dropping that low. REPEAT: We will be reviewing later this week a basket of oil stocks that will benefit if oil follows the forecast of higher prices. Eventually oil is going to move up, it is just a matter of time.

Retail sales reports come out on Thursday morning and January’s labor report on Friday. Both are likely to be negative and could trigger some selling.