Take a look at the S&P. We've had seven straight closes that are within 2.6 points (0.22%) of the opens on light volume. Six of these seven closes were within 1.3 points of the open!
I can't remember the last time we've had seven small bodies in a row of less than 1/4 of 1%, but it's been years. You think people are waiting to see how the election and Fed meeting go? Nah.
By the way, if the Republicans don't take control of both the House and Senate, the Bush tax cuts are in serious jeopardy. If that happens, you'll have accountants, tax planners and money managers all across the nation advising their clients with long term capital gains to take those gains during 2010 at the 5% or 15% rate. It remains to be seen, but such a scenario could be akin to shouting fire in a crowded theater.
By the same token, the markets have already priced in a healthy dose of QE2. What if the news is not as juicy as the rumor?
The way I see it, against the backdrop of great indecision, the only surprises we are likely to get next week will be negative surprises.
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Posts
Parker
ReplyDeleteMe, too!
Bill
I first heard the expression......"buy the rumor, sell the news" in 1966 when I was in NYC for the 6 month training program offered by F. I DuPont & Co in 1966.
That expression is as germaine today as it was 44 years ago.
Bill
I also think we'll top on Fedspeak.
ReplyDeleteHowever, if they do something really stupid, like announce QE II of 2 trillion or more, stocks and commodities could explode to the upside and the dollar would drop like a rock. Uncle Ben seems determined to keep the deflation bogey man in check, so I would not put this past him.
Parker - you have mentioned bradly dates below ...if you are expecting Nov 15-16 of any importance then my guess we will go upside towards that date and fall only after that. My guess is if we get big down Monday then we will rally after all news on Tuesday. Wensday etc towards Nov 15-16.
ReplyDeleteThis appears to be a critical juncture for multiple markets.
ReplyDeleteThe DJIA is bumping up against heavy resistance here at 11,200 (monthly charts); if they do turn down here in November then I expect a down move into the April-June 2011. However if the DJIA closes the year above 11,500, I think the next target is the old high at 14,000.
I also think Gold has peaked this month and I expect a trend reversal for the next 6-12 months.
Yash
ReplyDeleteIf we get a down move into the nulled echo low, it will likely be a 5 wave move. Waves 1, 3 and 5 are down, and Waves 2 and 4 are up. In this scenario, Wave 2 is likely to terminate around November 12, perhaps November 15-16. BTW Wave 3 can't be the smallest wave among 1, 3 and 5.
Parker,
ReplyDeleteHave you looked at the relationship between Copper and SPX. I just sent Terry a chart of copper versus the SPX. Copper has been a leading indicator and broke it's uptrend line about seven trading days prior to the April top. Copper sits right on it's uptrend line right now. It's is possible it will break the line in the next one to three days. What do you think of this indicator? It is forward looking.
Best,
Steve C.
To be more precise about my copper leading comments. Bring up a chart of JJC (copper etf) and draw a line from the lows on 2/5, 3/24 and 4/15 points. The line breaks on the 4/16 which was a Friday, and six trading days latter on Monday the 26th, the SPX tops. Now draw a line from 7/16, and 8/24 and you will see we are essentially sitting on that line now. So, if the pattern repeats, a break here Monday, Tuesday or Wednesday ought to give us about six days before a final SPX top.
ReplyDeleteSteve C.
Hi Steve
ReplyDeleteYes - I look at Copper vs. the S&P. On Stockhcharts, I use the symbol $COPPER which is the End of Day (EOD) futures chart.
Copper futures have lost 3.5% over the last 3 trading days, while the S&P is essentially flat (down 0.2%).
We previously saw bearish divergence between Copper and the S&P at the January and April highs.
Parker and Steve
ReplyDeleteI like the Aussie dollar as recent market indicator... take a look at the Aussie dollar, copper and the SPX. since the first of the year, both the Aussie dollar and copper have topped prior to the SPX TOP.....
Seems both the Aussie dollar and copper are saying the SPX is topping.
Just another divergence...
Sigh!!!!
Bill
sorry, I forgot the chart.
ReplyDeleteHere is it
http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=1&mn=0&dy=0&id=p54983249629&listNum=8&a=212702631
Bill
Monday, Nov 2 close = 1.37 points below the open. But it was a wild one getting there!
ReplyDeleteVery nice chart, Bill!
ReplyDeleteI disagree. I think it's more likely we see a final and massive killing zone of shorts who think we've seen a top. Just my opinion
ReplyDeleteAs an aside, from the ashes that will be left of the shorts, we can build another day (Moody Blues)
ReplyDelete