Transcendental Market Fragments:
The Market:
Despite fairly tepid breadth, the market was able to mount one more day of rally yesterday. The Russell 2000 even moved above its swing high of a couple of weeks ago. But, the blue chips were still lagging the broad market. The S&P 500 Index found strong resistance at the 50% retracement level near 1406. The Dow barely stabbed the 38% retracement level. And, although the QQQQs were able to retrace about 80% of the decline, money flow showed that the rally was mostly due to lack of selling pressure, not intense new buying pressure.
I'm watching for weakness to start coming into the market, but with so many bearish bets being made, a diffuse, rounding wave b high would allow for high level distribution before another leg down next week (beginning mid-week).
Gold:
The Gold bugs are crying about market manipulation, but that market turned when Gold moved to the upper trading band last week and was brought into an overbought state. It's interesting that with inflation so high, Gold, normally thought of as a hedge against inflation, would be so weak. It's not really such a great hedge against inflation, perhaps?
Eur/Yen:
This currency pair has a tendency to correlate fairly well with moves in the equity market. It has been in a large trading range which lines up fairly well with the stock market. If the pattern is a contracting triangle, the next move would be a decline. And, if the correlation continues, that would pressure stocks. Correlations don't last forever, but this one bears watching. |
