With the Dollar Index taking it on the chin, and 78 looking more like resistance than just a stepping stone on the way to higher correction, the market picture looks cloudy once again.
Those looking for a clear answer to what the future holds can only be guaranteed 3 things, 1) risk, 2) volatility and 3) 20/20 hindsight. That being said we entered into 2010 with a bang. The stock indexes made fresh 15 month highs, while crude oil and the metals beat the bullish drum and rallied higher. Feb crude oil is flirting with its old October highs, possibly staging a charge for the 82-83 level. Impressive, since just 14 trading days ago we were below 71. While impressive, we’d have to settle above the 83.50 level to really change the intermediate term trend from neutral to bullish.
In the stock indexes, there are so many resistance levels above where we currently are that it seems almost silly to list them. Lets just say in the Dow, there will be resistance every 100 points on the way up, with special attention to the 11000 level, 11,500 level and 12,000 level. Any nice round number for the TV analysts to ruminate about will attract sell pressure, at least on the first test of that trading level.
In the S&P 500, the 1200 and 1300 levels will attract the same level of anticipation and mindless commentary and speculation.
The only thing I am sure of, is that for this market to turn and stay bid, it will have to keep shrugging off bearish news. In fact the most bullish thing for the stock indexes would be for unemployment to push to new highs on Friday. If those hypothetical new highs in unemployment were met with fresh new highs in the stock indexes, despite the weakness in the job market, then THAT would truly be a bullish sign. If the market gets bad news and rallies anyhow, then its telling you something about underlying strength. In the mean time, we can only watch. Right now, its looking like we may be getting the rally before the good news. If that is the case, we could have a 4 day rally, met with lower unemployment figure released Friday morning at 730 CST… At that point I wouldn’t be surprised to see a sharp break lower as profits are taken in a typical buy the rumor… sell the fact scenario.
Just food for thought.
Good Trading
Good Trading