On the way down we had support at S&P 870, then 840, then 770. So each level that breaks turns from support to resistance. Right now after a huge move the past two days we sit in between two of those levels: 840 and 870. A bear can look at this chart and say the move is nearly over and we are now at the resistance level (20 day moving average) that has been the ceiling the past few months. A bull can say, this is some very minor consolidation after a huge move up. I have no skin in the game since I'm quite hedged. We will let the price action dictate to us where to go next.... between 840 and 870 is no man's land to me; I'm neutral here. A break below 840 would get me leaning bearish and a break above 870 would get me leaning bullish. Again these are on a closing basis... so 4:01 PM is more important than 3:51 PM. (and in that time frame this market can move 3%)
It's really as simple as that. This market is all about sentiment - the news is bad and will continue to be bad for a long time. That doesn't mean the stock market will go down 12 straight months. Hope is not an investment strategy but hope will from time to time pop up - we are in another period the past few days where "hope" that the government will save us has once again resurfaced. This has happened many times the past year and a half, only to be followed by disgust when we see government revealed for what it really is. The hope now is that was the "old government" and the "new government" will actually have (a) a clue and (b) act in the people's interest rather than the corporations. That would be a huge leap but the point is... perception is reality. News does not need to be good; just the perception that the future is better and people will look through the abyss.
So I can post those thoughts today, next February, next June, and next October. They will remain the same as I believe the economic slog will be long, and worse than people believe today. But we'll have rallies along the way.
None of our "conditions" have improved as for what we're looking for a sustained rally but all it takes is a week of good action and a lot of people on the sideline will rush back in not wanting to miss the party. I find it fruitless to make predictions so we'll just let the price action dictate to us. But again, if I saw this chart I'd be leaning bearish until proven otherwise. Frankly, I long for the day when I can start talking about individual stocks and sectors again - and it actually means something.
The witching hour approaches; every hedge fund trader in America now is about ready to put in his one hour of work.
5 comments:
TM:
Good stuff again!
It really is unbelievable; I listent to CNBC on the Sirius radio and you get the sense that the national pastime is what is the market doing today. Furthermore, the silly commentators cheer stocks on these capital infusions and are so breathless that they can never ask the question of how are we going to pay for all this. Yes, the market may be up and may only be due to perceptions of better times ahead, but I am having a hard time seeing what those better times might look like. I suspect they will be like 2002 to 2007 where you having rising inflation and subpar growth but only the next period will be worse because of the ballooning deficit.
With regards to market you have to wonder why bond yields are down today and stocks are hanging in there. I suspect little downside pressure all week due to the holiday.
We've turned into a nanny state
the government must step in or the toddlers will cry and sell off the market
when the government steps in, they cheer as risk is offloaded off of Wall Street and onto American taxpayer
instead of cheering people should be asking why such historic action is now being done on a weekly
basis.
I think since Fox Business Channel came on in October 2007 the market is down 40%.
I'd love to know the market stats since CNBC came on.
CNBC basically feeds into the Ritalin generation, video game playing trading. When Charlie Gaspirino says jump, stocks can move 5%. Remember all those Ambak bailouts that used to move the market 5% in January February? Ah, the good ole days.
What is so bizarre regarding the market action is that it has become impossible to invest in any idea that isn't all American apple pie. Betting on stocks is good; shorting is un-American. Bet on oil? No way; you don't see those guys coming to the government for a hand out. Bet on gold? Ehhh....not going anywhere fast. Bet on higher yields? Not good for stocks so not a good idea. It is tough swimming up stream at times.
we are very americanized here
look at those infrastructure stocks fly now, JEC, FLR et al. When the rest of the world slows down you can't touch them with a 10 foot pole - but when the good ole USA rolls out a New deal 2.0 they are great buys! Sometimes I wonder if Americans realize there are other countries out there not named Canada and Mexico.
Darn education system...
I thought Canada was part of the good ole USA...oh ever been to Cancun? Easier to spend $$$ than pesos...got to run carpool!!!
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