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Pastimes : The Philosophical Porch
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From: Rarebird12/11/2009 9:10:14 AM
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Transcendental Market Fragments:

The Market:

The market continues to move sideways through the trading range that I expected this week. The market should be near the final cycle low now. Once the low is in place, the market should get a rally out of the range, a thrust that exhausts the bulls. The MidCaps continue to show the best pattern of price action and money flow, but overall the stock market is just treading water right now (it often does this in early December because mutual funds and hedge funds have closed their books for the year and individual traders are taking profits and losses for income tax season - most are unwilling to place bets for the new year just yet).

Breadth is just as neutral as the market itself.

Sentiment:

OEX traders are overly-bearish. On Wednesday, they poured about 2.5 times as much money into puts as calls and on Thursday, they put slightly more money into puts than calls. This is usually a good buy signal.

EUR/USD:

The Euro - the inverse currency to the dollar - is extremely overvalued at about 1.5 Euros to the dollar. Remember, the Euro started life at parity to the dollar. Being 50% higher puts Europe at a considerable disadvantage in competing with the US for trade, so there's a lot of pressure on the Europeans to devalue the Euro. Short term, however, the Euro is oversold and trying to mount a bounceback to test its broken support line.

A rise in the Euro will pull stocks out of the recent trading range and lead to an exhaustion rally to put in a final high.
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