Hi Everyone
Just a quick update on the major indices and the main markets.
For the second week running the first trading day of the week spiked up on pretty non-descript news, having followed a bearish week before.
Yesterday, the market ignored the woeful housing figures and instead jumped on the (somewhat more flakey) consumer confidence figures.
This smells of the market wanting any excuse to either go up or stay rangebound, even though common sense suggests it should go down.
The charts are still a bit on the ugly side, so it’s best to observe. However, what the markets are all trying to figure out is what next on the S&P and the Dow.
Here’s a chart of the S&P. If the market breaks below 875 then we could have a lovely downdraft. On the other hand, a break above 932 and we could be on for a another bull run.
Remember, the markets and the economy are two different things. So we may not see anything too rosy out there in the real world, the markets are trying to be one step ahead of the game.
Without sounding like a prophet of doom, I still think there’s a good chance of the markets testing the March lows at some point. However, I won’t be trading bear flags until I see a bunch of pretty ones (as per the CDs) together with the main indices breaking down as well.
Here’s a chart of the Dow Jones Industrial Average, which you can see is virtually identical the S&P snapshot.
A break above 8600 could herald a bull run, while a break below 8000 could be the start of a proper downturn.
Right now we’re kind of in limbo. But trading is a hunter’s game. You want to be in place, alert and ready for the kill when the market starts to move decisively – that’s where we make our windfall profits. And when that happens it pays to be quick!
All the best
Guy