Markets didn't do much in the final couple of days of trading last week. Bernanke's non-mention of QE3 at his FOMC semiannual report to the House Financial Services Committee on Wednesday, likely prevented any follow-through of buying enthusiasm. It certainly provided an excuse to sell the Gold and Silver markets as they got crushed Wednesday. That selling of the precious metals seemed excessive given the fact that the overall commodities sector held up much better as did the broader markets.
In any case, charts remain bullish. Until that changes, I continue to prefer buying the dips. At the same time I like selling rallies to new highs. Point is, I'm not interested in holding long positions in an overbought market that could begin a correction at any time. If I had to hold a swing position, I would likely prefer to hold it short right now as I do expect a 40-50 point move down before seeing a 40-50 point move up from the current highs on the S&P 500.
This morning we are seeing some weakness in global markets.
China cut its economic growth target to 7.5% annually from 8.0%, the lowest target since 2004 sending Asian stocks down. Eurozone PMI data was lower than expected and European stocks are trading down as well.
The ES showed reactionary selling overnight declining to 1361.50, but has climbed back up 5 points in the early morning.
Levels to watch today on the ES:
Resistance above at: 1370-1371, 1373-1375, 1381-1382
Support below at: 1361-1362, 1358-1359, 1350-1352
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