So far today the ES has developed a day session range of 1178-89. As I write this the market is trading at 1186, in the upper part of that range. I judge this to be a bullish performance in light of the high volume selling that occurred this morning after Spain's debt was downgraded by S&P. In fact the ES is now trading where it was trading before the news came out.
The financial problems of Greece, Portugal, Spain, and Italy are well known. The market has repeatedly discounted the consequences of this situation but I think it is getting tired of doing so. This sort of bad news has not had much net effect and I think this reveals the underlying strength of the current bull market.
I don't have much of a feel for the price action we shall see the rest of today and tomorrow. (The Fed will make an announcement at 2:15 pm this afternoon.) But I am confident the market is scraping bottom and that a move up to 1270 is imminent.
5 comments:
thanks for your analysis.
I too think the ES bottomed at 1177.5 yesterday with a retest this morning after the downgrading of Spain's debt.
Positive divergences are still in play. The overbought condition was lessen a lot by yesterday's drop. For as long as daily RSI remains above 50 for the SPX, bears will cover their shorts. The bears will need fresh news (bad) to bang the market lower.
I don't get your GLD and SLV calls. I'd love to get an analysis of how you came up with those 2 numbers...Maybe a chart/post on these? So many are bullish on the pms at least for the short term, so perhaps this is your contrarian trader instinct.
My take on this is that the european debt is a serious threat. And this is well known. The bond markets have punished Greece and will punish other european countries. It could eventurally spread to the north american bond market. The bond market is not wrong and the greek bonds are pricing a partial default. This will spill over to the stock market. It already has in Europe where markets are down 6%,
A healthy bull market can not thrive in this environment. A correction is coming. May not be this week or the next one, but within the next month a significant 10% correction at minimum will strike.
Well said Carl.
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