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A Short Comment . . . May 29, 2012

Posted by Tom in Thoughts.

I was out-of-town over the (US) holiday weekend, so this post is late, but really, not much has changed.  Looking at the chart below:

We see a possible Selling Climax (heavy red down bars) highlighted with heavy volume (circled in yellow).  I say ‘possible’, because the structure has not been confirmed yet.  But at least now we have a nice reference point, the low of that climatic bar at 1295 (S&P 500 Index), which is shown by the gray horizontal line across the chart.  Now . . IF prices go below that level on anything but light volume, I’d be worried.  On the up side, short-term basis, a break above 1332 (and holds above it on a close) may be more bullish.  I say ‘maybe’ because it all depends on how the level is broken; lightly or decisively. 

Right now there are not many “long side” securities to consider buying.  Yes government treasury bonds are strong, but it’s rather late in that game with almost as much downside as upside potential.  There are a number of Short plays, especially in the International markets; Latin America, Emerging Markets and Europe, but these are also developed plays now and new positions should be cautious.  So Cash is looking pretty good right now.  Untill the issues in Europe get directionally resolved, there will likely be volatility both up and down . . . mostly driven by the news or rumors.

We can and should wait for the market to tell us its next move and right now there is no clear direction, but at least we have some reference points to alert us.

Take Care and have a good week.        …….  Tom  ……


1. garmin 1490t - June 17, 2012

You wouldn’t consider it but I’ve wasted all day digging for some posts about this. You are a lifesaver, it was an very good read and has helped me out to no end. Cheers!

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