It depends what you define as “there”? Is it the 200 day moving average on the $SPX daily chart at around 1278 or is it the 200 day moving average on the weekly chart which is down around 1135? Everybody has an opinion and I guess we can all make it as bad or “less bad” as we want to. We also also have a tendency to see what we want it to be. I can show a chart to two technicians and get two different opinions. Happens a lot.
So what happens tomorrow? It was an ugly week. All of the indices went out on the lows on Friday, $FB held its bid and we had option expiration. I read this weekend in that China is turning back cargo ships loaded with iron ore midstream as they cry “no mas”.
Crude has dropped from 111 to 91 in ten weeks. Coal, steel and fertilizer socks are dying on the vine and the only thing that has been working is natural gas. The latter caught all the shorts leaning with this rally because they all thought it was going to zero. Didn’t happen. Has the commodity super cycle gone bust? I guess that depends on China and China greatly depends on Europe.
The market always tries to discount the future which usually means that economic weakness is only a disaster if it hasn’t been discounted. Right now investor sentiment is in the dirt and I am seeing some technical readings on individual stocks that weren’t even this low in 2008-2009. This doesn’t feel to me like 2008 and I remember it like it was yesterday. Charlatans like Jamie Dimon may get us there though. Corporate arrogance has been running amok lately.
So many things to worry about here; Europe, the fiscal cliff in the U.S., the election, corporate profits and our run away debt.
When risk comes off and the market is in a deleveraging mode I don’t think the charts are “as” important. The vanilla funds just sell everything and the algos kick in. I can only imagine what “long only” energy funds are doing right now.
Remember everyone told you to sell treasuries in April? Well $TLT has gone from 110 to 125 in that time frame and yield went from 2.38% to a 1.70% yield. It used to takes millenniums for that type of a move, now we get it in weeks. Things can go the other way quickly around here.
Everyone was waiting to buy the dip, well here you have it.
“The Bernank” may have an ecstasy rave planned for June. Bad is probably good right now. Not panicked.
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