Tuesday Evening 8 December 2009
In the Article re Ayn Rand, S & P – Ayn Rand Nailed This Over A Half Century Ago!
we were corrected in the reference to “Who’s On First” NOT from the Three
Stooges, rather credit goes to Abbott and Costello. It turned out to be our most
popular article, to date, and we thank our readers. Feedback is always
appreciated.
The quirky S & P market has been showing more signs of weakness than of
strength, but that has not deterred the market from keeping rallies going.
The failed high from Thursday, followed by the new failed high on Friday,
which then drove price lower than Thursday’s low, shows the battle between
buyers and sellers, or maybe the balance between the two. It continues to this
day, even after three weeks of rally for a day or two, and decline for a day or
two. One thing is certain: it will not go on, let’s say for forever, in case it does
go on for another three weeks. Ho! Ho! Ho!
The inability to hold new highs tells us that the demand buying has weakened.
Monday was an inside day, a small range with little volume and not a lot of
conviction from buyers or sellers. Tuesday saw downside continuation,
confirming the weakness from the highs. The question of the day is, will there
be more follow-through from sellers that can break 1085 support? That is what
is needed; a statement from sellers who have yet to take advantage of a
vulnerable market condition, such as this one.
We have already addressed the shortening of upward progress as a measure
of a tired bull market, S & P – A Picture Worth A Thousand Words , where we
described the lack of upward progress and the declines getting deeper. Still,
the missing link is supply selling in sufficient volume to break the upside
momentum. We come to such another area tomorrow, if price can get there.
You can see the trendline up from the lows, indicating the trend remains up
overall, but neutral for the past month. The indications from market activity
argue for lower prices, but that line has been used in the recent past, and it did
not work. It may well be that everyone is taking the rest of the month off to
let the market flounder around the highs. Sellers need to break through the
1085 level, or reach 1085 and then stage a weak rally as a prelude to another
thrust through that support. If not, buyers will simply rally the market, although
on what grounds is uncertain with no jobs report to bolster prices, at least for an
hour, like Friday.
Based on what the market is showing us in the present tense, we have to go
with the direction indicated, and that is down. New information may come in
tomorrow, at some point, to rally the market back to the upper end of the
trading range, but that is less of a probability. Then again, if sellers do not
show, throw probability out the window.
We recommended shorts on the weak rally after the gap lower price decline
that continued Monday’s lackluster effort. The inability to mount a rally all
day suggests that price was accepting the lower level near 1092, but price has
been full of surprises in both directions, these days. Early evening trade puts
the market 150 tics higher from the close, so things can still go either way.
