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Tuesday, June 25, 2013

A Good Day To Bounce

We were due for a bounce, and we got one, tight where we should have, at S1. Now we are likely to bounce to the 50% retracement point of the recent decline, and if that is the decline from the May high, then half way is right about where pivot point P is. We do, however, have the 50dema in the way, which may be a resistance point, but for now I would say it's safe to say this is a bounce rather than the beginning of a new up trend.

Crude oil had just broken out of a long range last week, only to get sucked back in, and after a nasty collpase on Thursday, has found support at a pivot point. It is now up to the next pivot point, where it may very likely find resistance. If it can break out here, it will likely test the prior high, and that could lead to a market up trend. At this point I am not terribly confident that will happen.

Gold has broken yet another support level, and the 50dema is s=picking up speed to the down side. This might be good for a very short term trade is you catch it right, but there just isn't much reward potential here right now., and even a short at this point is probably highly risky.

So, is this the warning shot, or is the bond market in full revolt? From the look of this chart, I would say it is a warning shot, since this is finding resistance at R2, but this month is almost over, which means R2 won't be resistance for much longer. I guess there is a silver lining here: all the idiot spending in Washington will come to an abrupt halt if this keeps going.

The best trade in the last week? Stuffing cash in a mattress. The Dollar index is headed higher, but may be hitting resistance here, and likely will pause for a while, which should let the market catch it's footing. Again, the pivot points change after the end of this week, so this may not pause long.

It appears we are in a bounce, but whether we have hit bottom or are just giving the short sellers a golden opportunity is not going to be known until we see what the volume is like on the way up. So far, it looks pretty weak, but it can easily pick up strength. I will be monitoring for the well known IBD follow through day, which has a poor June record, but July is usually pretty good. We shall see.

I will have the new highs update shortly.

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