(Marco Bonelli) Are half-baked trading sessions like yesterday useful in any way?
With fundamental data disappointing for more than two months and the deterioration of the global fundamentals apparently accelerating, it's a bit surprising that we haven't seen a 300-points down-day in the Dow Jones for a long time but at least closing prices for the month of May were sort of successfully manicured "off the lows".
The lows of this correction so far from two weeks ago (May 18) will clearly be tested again and/or partly broken today, the only significant supports being watched will be various 200day MA lines: 12250.75 in the Dow Jones, 1284 in the SPX, 2756.25 in the Nasdaq Composite, 2434.20 in the NDX, 908.50 in the S&P400 Mid-cap and 756 in the Russell 2000. The index that once again turned out to be the best pre-cursor for the current developments, the Value Line Index, already broke its 200day MA on May 17 and closed only once above it since then. Maybe reaching the calculated downside (at 325), of a bearish head-and-shoulder formation between February and May will be treated as real support, that's another 9.5 points or 2.84% downside from yesterday's close...
The more interesting question for the majority of market players however, will be when the Fed will act and officially announce a QE3 operation. Looking at past official FOMC statements ("...labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated..."), looking at official forecasts and looking at a shrinking Monetary Base since end of February, the Fed might possibly need more data to assess the situation and reverse course; therefore, investors, who hope for a helping hand from the Fed in the immediate future may get disappointed.
With the inevitable recognition of fundamental reality and the medium-term outlook deteriorating, let's see if the market sets a clear statement or continues the frustrating day-to-day activity with another half-baked session.
Have a great summer weekend!
(Marco Bonelli is the Managing Director of International for CL King & Associates in New York. The opinions expressed are his own.)
Nessun commento:
Posta un commento
Per commentare é necessario un indirizzo email "@gmail.com". Se non ce l'hai puoi farlo qui, oppure iscrivendoti al vlog. Altrimenti puoi usare una delle altre opzioni disponibili nel menù "Commenta come".