Holding Ground
After the Dubai government basically said "tough toenails" to lenders of Dubai World, the fallout resulted in a strebgthening of the dollar overnight, but just in time for the market open, it dropped and the market opened about even, and we even got a little rally at the open. However, the news just wasn't cooperating: Iran has seized British hostages, sending the price of oil up; and the NY Fed announced more reverse repos, attempting to drain liquidity from the system. It looked bleak until the last half hour, the domain of the computers, who jacke the market right back up. 1080 is being defended quite strongly, and until it's broken, we have to give this market the benefit of the doubt.
As weak as the Nasdaq is , it held the 50dema, and bounced right off it. Volume on the indexes looks like an impressive increase, but is actually just average. I will be looking for a test of 2170; a failure to get above it will be a short signal.
The Dow looks like it is going to test it's previous high. A breakout here, even with the weakness of other indexes, would kill any ahort ideas. 
The Russell 2000 has a critical support level at 575, and went right through it today, which got the buyers to ome in and close it above. It's hard to say if this is going to bounce here or not, as this showed extreme weakness in the morning, but made a nice comback. The bearish "M-A" pattern is still intact, but until it completes there really isn't much to do here.
Yesterday oil broke through the floor of the flag pattern, but managed to get back above it, barely closing with the pattern intact. It got a bounce right off the 50dema, undoubtably helped by the news out of Iran. Hey, look on the bright side; if oil goes through the roof, then Abu Dhabi can backstop Dubai.
Dubai may just be the preliminary for a cascading series of soveriegn defaults, including but not limited to, Ukraine, Hungary, Greece, Ireland, and, God help us, an implosion in Japan. Black swans, indeed.
I will have the new highs update shortly.
2 comments:
FO SHO BR ... (AKEDOWN) could be coming after early shorts get run in. However, the Sun supermaket tabloid does say that the market will do really well next year. Who knows? I certainly don't and have replaced my subscription to Barrons with Archie (Guess I must be longing for when times were simpler and the jokes were more straightforward). Anyway, I wanted to thank you for the links. I am being very lazy with blogging and it will be interesting to see if they die on the vine before I finish editing this book and get back into writing posts again. Regardless, thanks very much David. Cheers and enjoy your sunshine there. We got our first freeze here this week.
73's
Hi X,
I hear about how good things are going to be next year, but what I don't get is what exatly is supposed to fuel all this growth. The Fed seems determined not to let housing pries decline to a point of sustainability, and they are betting our future that they can do it. Here in California, we are spending next year's budget this year in the hope that housing will reover and things will get back to normal. If by some miracle we do start blowing credit bubbles again and things go back to "normal", that gives us, maybe, a couple of years before the next implosion, and if we don't, and housing keeps dropping, it's going to be ugly.
I really like the shortwave blog. My professional experience for about 25 years was working with radio, mostly if the HF (shortwave) frequency range, and although there aren't any jobs in the field anymore, I still like to check out what's going on.
We are getting some sunshine, but it gets quite cold as sone as the sun goes down. It's pretty strange to be in the 80's in the afternoon, and 3 hours later it's about 30 degrees colder.
Good to hear from you.
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