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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (48212)	7/4/2012 1:19:40 PM
From: E_K_S	Read Replies (2) \| Respond to of 70601

Hi Johnny This rally although broad based it is suspect to me. First it happened at the end of the quarter where there was window dressing that accounted for extra trading activity (close out positions) that normally would not have occurred. Even then, the trading volume was quite low (well below average daily trading volumes). Second, the three day volumes for Friday, Monday and 1/2 day Tuesday was extremely low and for me does not support the 3% gain in the $SPX index and the 7% gain in the IWN. To me, it looked more like some very large hedge funds driving up the market (especially the last 8 minutes of trading Friday) making the shorts cover their positions and amplifying the move higher. In fact, Friday the S&P pushed up 10 S&P points (about 90 DOW points) in that 8 minute window during the last hour of trading. I think your conclusion is fairly accurate "sitting this one out till the test of the recent high". Technically, we needed to kiss the resistance/support around SPY 136 (six previous touches) before any significant break down lower could occur. I am a bit bias as I can not see any valid arguments to support higher valuations especially w/ earnings around the corner. The next move for interest rates will be higher, no solution for the Fiscal Cliff (but automatic cuts) and the EU situation is not resolved w/ a sustainable long term solution. I am also watching the contraction of GDP's across the world and am worried that commodity prices could still fall further. Finally, w/ the disclosure of the recent LIBOR rate setting collusion by several of the major banks (in their own too-big-to-fail bank cartel), I no longer trust these institutions and/or believe what they saying to the media (and/or the strength of their balance sheets). Many of them have not yet "marked-to-market" their loan portfolios and/or have taken these assets off their balance sheet holding them in separate "off balance sheet" accounts. I also do not think any of the government(s) and/or IMF over sight authorities are being proactive to resolve future systematic risks. There probably will be some future "risk event" that will occur before any meaningful regulations are implemented. As usual it will be too late as the damage to the world markets will have been done. I am watching the $US currency closely as I expect $US to continue stronger, perhaps as much as 20% relative to the EURO. PowerShares DB US Dollar Index Bullish (UUP) is what I follow here. Maybe you could add some additional chart(s) that measure the CRB price and the $US. As the $US gets stronger (relative to other world currencies) the CRB Index price should fall as well as the $SPX. Once these relationships no longer correlate it may indicate a change in the trend. EKS