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S&P Pattern Continues In Spite of Sell-off

sp-with-fib

Our pattern of being range-bound between the 200-day moving average and the resistance line around 950 on the S&P 500 Index continued today in spite of the sell-off.

The Breadth Chart that I posted yesterday was pretty accurate in showing that we were ready for a bit of a pullback. However, if you look at the volume on the chart, it was low. A low volume sell-off does not indicate that we have a change in technical outlook, particularly given that the trading range was not violated.

Oil was down, but it didn’t break our uptrend line by falling below the 13-day moving average line.

wtic

Gold, however, has broken its support levels in quick fashion. We need to manage our positions and determine if we should sell or add to them. Given the monetary stimulus from the Fed, this may just be an add-to opportunity.

gold

The Dollar rallied hard today on news (coordinated by the Fed?) from Japan and the BRIC countries that they really like the dollar in spite of other recent statements and that it is the reserve currency of choice. You can see that the rally stalled at the 34 day moving average. Given the monetary stimulus, there is no reason to believe that this is anything more than a counter-trend rally.

usd

All in all an interesting day in the investment world.

My best hypothesis is that we will get a bit more sell-off but that there will be a need to move the market higher before quarter-end by the Wall Street firms. Based upon the low volume today, this could just be a coordinated effort to draw in the shorts so that they load up with new bearish positions, then the big Wall Street players will push the market back up, forcing the shorts to cover their trades into month end.

Sorry to be such a skeptic. The last year or so has really been enlightening in terms of the manipulation of the markets by Wall Street and the government. It makes the job of managing money difficult at best.

Mark