Wednesday, May 19, 2010

05.19.10 - "Official" Correction at 200-DMA

We are getting a reflexive bounce back up to the VWAP after tagging the 200-sma/ema and recording an 'official' 10% correction off the SPY's April highs. We'll see how we do at the VWAP here -- on the bull ledger, the VIX is peeling back from its near 40 tick. Metals are certainly getting hammered. Should we reverse and close under the 200, however, I would be very pessimistic and extreme caution is warranted here. Next SPY support at high $108 level, then we are looking at $105....


jgpietsch said...

Hi Ben, I guess I could have just written the market sucks for the bulls and been done with it huh?

jgpietsch said...

Last Night's Letter:

Dear Subscriber,

The S&P finally tagged its 200-day sma/ema today, where it immediately found somewhat tenuous support with the VIX just a hair under 40. We have an official bullish signal on the board for tomorrow. With the market normalcy meter low; however, I'm keeping exposure very small.

On the bull ledger, the market finally reached 'oversold' on a fairly broad spectrum of tracking indices, the Euro was bought, earnings news has been good and a disconnect between the news flow and trade is potentially emerging -- a bounce could perhaps take us into the middle to lower third of the recent range at best, I expect. Bear case... well it isn't particularly pretty technically anyhow, let's say SPY $105 to $108 for now should we close below or break $110.

There is a 'big move' alert on the board -- things could get binary quickly if we retest or certainly close below the level indicated above. I don't wish to be overly pessimistic, but there is just no putting lipstick on those piggish internals today, save the thought that they may be overdone.

Initial Jobless claims are expected just under 440K again tomorrow.