Tuesday, November 2, 2010

[Chart] Market Keeps Retesting 200 Week Simple Moving Average

For some odd reason I cannot get stockcharts.com to show me weekly averages (emails appreciated on what I am doing wrong, I've changed the parameter from daily to weekly), so I grabbed this from Afraid to Trade; it is about a week old but due to how slow this moving average adjusts it is still fine.  Much like in April 2010, the S&P 500 is staring at the 200 week simple moving average.  Back then it was rejected ... QE1 had completed... we had the flash crash... and the rest is history.  Now the market is at the same technical juncture, except this time the Fed is behind the market full blast.

[click to enlarge]

Based on the price action I am seeing in a lot of names I follow that have earnings this week, people feel like this market is risk-less.  They are piling into names ahead of earnings, driving some up 5-6-7% mere hours before the report.  Quite fascinating really.   The change in psychology from August is profound.

So from here we see if the cocktail of (already known) elections + QE can take us over this level tomorrow.  If not, I guess the next try is Friday's employment data.

S&P 1090, and 1110 (gaps) still are out there; in a "normal functioning" market these traditionally fill in 2-3 months.  We are now at about the 2 month mark, so in a market without a 'visible hand' behind it, it would be a no brainer to put on some index short exposure expecting to make some boffo profits in the coming month.  At this point S&P 1090 is 100+ points to the downside.  But of course, we are in a market that is being shaped by non typical forces so it's impossible to figure out how it acts.


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