Market Commentary into early September
Rebound Friday – Monday, August 30, 2010
The equity markets continued to decline last week but rallied hard on Friday to cut into the week’s losses. The ESU10 S&P 500 futures contract closed last week at 1070.25 and dipped all the way to 1037.00 on Wednesday. They retested the low Friday around the time of FOMC chair Ben Bernanke’s comments on monetary policy were being released by trading at a low of1037.25 before bouncing into a close at 1063.75. The market is in a clearly defined downtrend and we expect resistance at 1075 should the ES keep bouncing higher.The Hindenburg Omen which we have written about over the past years has made its way into the mainstream media now. Much of what is being publicized is incorrect and please note that like many indicators, there are different ways to filter and interpret the information. There was another signal recorded on Friday and this cluster has been sufficient to put us in the extremely cautionary camp. The fact that we recorded this signal on a day that was also a 90% up day is even more reinforcement that the market is under stress at the current time. There may be a major problem in the market that is still unknown but caution is warranted.This is potentially going to be a slower week as we head into the Labor Day long weekend. This is traditionally the last week of summer in many parts of the country and traders may try to work in one last vacation. This may result in volume tapering off as the end of the week approaches. We still believe that September and October are going to result in serious volatility and some big moves in the stock indexes.
Past performance is not indiciative of future results. Futures trading involves substantial financial risk. Please consult your personal financial advisor before using this information for your own trading purposes.