Are you ready for the shorter 4-day trading week? I know I always enjoy the 3-day weekends, and this one was no exception. The market definitely gave a good shot of fear into the market last week. If you look at the daily chart of the Nasdaq it doesn’t look as scary as it may have felt. The bottom trendline extending back to mid-March provided a small bounce to end Friday’s trading.

Traders may take it down to the trendline that stretches from the 10-31-07 high. That’s roughly around the 2380 area where the 50 day moving average currently sits.

A healthy pullback, with a little fear, is the only way the market can go higher in the long term. Two consecutive closes above the 200dma weren’t enough to hold the Nasdaq up. The market’s slowly building a channel higher, and the past two negative days are still in that channel. A little more unwinding here to 2400 would not hurt the uptrend.

I’m still finding less setups to trade, and should probably focus more on the ETFs. DUG had heavy volume today, and finally closed near the day high, as OIH closed at the day low. I took a position in DUG. In the past few days, I’ve heard both Cramer and Boone Pickens call for $150/ barrel oil. Could be, but it needs to take a breath every once in a while to get there.

Homebuilder stocks and the XHB have fallen below the uptrend established the past few months. Don’t think this housing and mortgage mess is over. You’ll probably be able to pick XHB up again at 15.