Today started off not too badly but then
once again the on again and off again
news of possible support from the
Federal Reserve when Bernanke spoke
around 10:00 AM, hit the markets and the
selling began. The VIX ended up above
20.00 which you may recall
from my article on
Understanding The VIX, some
investors consider a signal to sell.
As you may recall from my market
direction
call
of July 5 I indicated that the S&P
500 was probably going to test the 1310
and if that broke than the 1300 marked
the last line of support before a retest
of the 200 day moving average.
Today's action saw the market struggle to hold at
the 1310 and indeed several times it moved back
above it, but in the end the selling pressure
couldn't be contained and the market moved to close
below 1310.
The next move may be to the 1300. If that breaks
than the 200 day moving average I believe will be
retested. If that breaks than it could signal a
major move down and possibly an end to the bull
market. Let's hope this is not the case.
Below is the XLF and for most of the day it stayed
below 15.00 and closed on the low of the day, a very
negative sign.
The NASDAQ fell another 1.2% today and closed pretty
close to the lows of the day. Again a bad sign. The
NASDAQ rally is gone and we are heading back to the
50 day moving average.
Be careful until the market signals exactly its intent.
The market could surprise to the downside with a sudden
lunge lower should it take out the 1300 easily. While I
don't see it, a drop of 200 to 400 points would shock
congress and the Fed into realizing that they cannot play
too long with the debt ceiling and the S&P Possible Ratings
Downgrade. I have raised a lot of cash and tomorrow I have
more options expiring. I will be waiting a few days before
applying that cash back into the markets.
