FREDAlert!
Volume 2, Issue 7
May 7, 2010
We wanted to wait until after the open to put out a comment. Obviously yesterday’s action was peculiar, and because of trading glitches it is hard to see where the lows of the day actually were. We give a couple of observations below.
- First, what normally happens after an up open after a day like yesterday is that the market moves down and exceeds yesterday’s low, then rallies. Since the NASDAQ may cancel some of the trading where the low was made it is unclear where that is.
- Second, we had 112 on the SPY as the lower end of our expected range in this timeframe, and we did hit it, so this correction has satisfied goals in time and price.
- Third, some of our very short–term timing tools are now oversold.
- Fourth – we have mentioned how sharp declines occur when Investors Intelligence bears are low – this is the case here, and while a sharp down was what I was hoping for the magnitude was a surprise, and may not in fact be real.
- Last – the big violent part of declines is usually near the end, and not the beginning, of declines. We shall look at weekly indicators at the end of the trading day and write this weekend.
We would expect a see–saw day here – as I write this we are trading down, and would look for a rally and a flat day. We continue to like gold and gold stocks, and are watching oil. Our scenario of the dollar hitting the 86 area and failing, lowering some commodity prices, is still operative.
Disclaimer: