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Just when it looked like the bulls had stemmed the tide and the wild price swings were starting to abate, we wake up to a vicious gap down this morning. Despite the progress made by buyers in recent weeks, this is still the proverbial fish out of water market, flopping around and trying to make sense of foreign surroundings and predicaments. Clearly the news flow out of Europe is relevant enough to spook the market with each negative headline that comes out.
The S&P 500 is back down to test its rising 20-day moving average, which has been suddenly acting as support in recent weeks. Moreover, despite the huge move lower today, we are still holding above the prior multi-month trading range of 1120-1220/30. My main focus right now is not panicking either way. I am going to watch this 1240 level closely on the S&P, and should that be breached then I would expect yet another test of the top end of that prior range. As the session rolls on, I am going to focus on the action in individual stocks, to get a feel if we are seeing some bonafide breakdowns and reversals lower after the recent buying spree. Otherwise, today’s sell-of may be more of an index event that is not, in fact, presaging lower price ahead.
what smells like fish?
It’s this market amazing? Just when everyone thinks its lollypops and sunshine it fucks everyone.
On the opposite side of the spectrum when it was looking like the world would end in October the market suddenly decided it wasn’t taking anymore of that EU shit.
I guess this breakdown really isn’t that surprising. Mr. Market is just doing what he always does, trying to fuck everyone out of their money.
This three-pronged bottoming trend has happened the last several major market dips. We entered the second dip of the current bottom today. Next it will swing up crazily for a day or two. Then it will dip again, but not as strongly.
Then it will go up for the next big move up, of a few weeks. This seems to work as no one has caught on to it, and it’s psychologically debilitating enough to keep people out of the market if they can’t spot this trend.
The goal being to destory wealth by keeping people in the US dollar, earning no interest and being exposed to inflation.