There has been some continued pullback, or profit taking, depending on your mindset.
Its profit taking if you’ve been long indexes since July, or short them from their recent 9-month highs last week. Other wise, its just lower markets, on thin news during the holiday markets.
Apparently McDonald’s less than expected earnings reports is fresh bearish news telling us all how bad the US economy is behaving. Apparently people don’t go to breakfast when they are worried about being fired. What a surprise.
The most important factor today has been the 1 month high in the Dollar Index, driven by short covering from investors who sold the dollar in the hole, and now must cover.
Gold and Silver continue their correction from their recent all time highs. Just as we didn’t know how high “high” is, there is a chance now we will find out just how low, “low” is…Gold has dropped from the 1200+ level down to our current lows around the 1140 area. A nice 80 dollar retracement. But a retracement which was long overdue. The question now is at what point we will find good support here in these metals.
With the dollar index rallying, we most likely will not find support in the metals until we have found resistance in the dollar index.
The stock indexes are lower on the day, but technically looking more like either 1) a breather from the incredible rally we’ve seen, or 2) possible moving into a consolidation phase through the end of the year. The Dow futures look to be hemmed in within a 300 point trading range between 10200 and 10300. S&P futures look to be still in an uptrend, but with resistance at the 1110 area and support at the 1090 area. That’s enough of a range to keep the tv analysts hyping volatility or what ever their story is for the day. The truth is, its the holiday markets, there isn’t a lot of interest, and most people if they can, have shut it down for the year, looking ahead to 2010.
I look for continued sideways to sightly lower trade, simply because we just had such a large, relatively thin-volume rally which a lot of individuals missed out on.
Good Trading
