Market Observations 07/19/06
Yesterday, the RUT hit our target of 670 intraday, then the markets bounced up into the close. Todays followthrough action sent the RUT from 670 to 703, as short sellers ran for the hills.
With options expiration on FRI, MAX PAIN on the RUT moved down from 720 to 685. Aug options MAX PAIN are now at 705.
Fed Head Bernanke's comments suggesting there is room for moderation in the current rate hike cycle and calling for a gradual decline in inflation in coming quarters started a nice sucker rally in bonds and equities.
As Benny & the Feds admit: "much of the upward pressure on overall inflation this year has been due to increases in the prices of energy."
The Fed may pause, but with oil recently hitting new highs and heading for our $82.50 target, stagflation will do anything but decline.
Today's 222 points mirrored the 199 points on 06/15 and 212 point upsurge on June 29th and we see what happened after those "turn arounds".
With the markets ignoring ugly housing market decline and inflation ridden PPI & CPI numbers, it looks like another short covering headfake to me.
Get ready for some "happy daze" hype from the brown shoe boyz on the street about how the market is "oversold" and there are "bargains" to be had.
The NDX & QQQQ's bounced off the 900 DMA, NAZ butting up into 600 DMA. DJIA lept off 400 DMA to slice through 200 DMA, NYSE slicing through 200 DMA.
SP500, TMWX, MID & RUT lept from 400 DMA to rest just below 200 DMA. OEX jumping from 600 DMA to slice through 200 DMA.
We see another fews days of sideways pennant waving for the indices, perhaps falling to MAX PAIN, then perhaps another big headfake day to the upside sans volume conviction followed by a few more days of flailing.
Watch 720-725 RUT for upwards resistance, then get ready for perhaps another 50 point or more slamming in rapid fashion to the downside as the suckers get taken again.
With options expiration on FRI, MAX PAIN on the RUT moved down from 720 to 685. Aug options MAX PAIN are now at 705.
Fed Head Bernanke's comments suggesting there is room for moderation in the current rate hike cycle and calling for a gradual decline in inflation in coming quarters started a nice sucker rally in bonds and equities.
As Benny & the Feds admit: "much of the upward pressure on overall inflation this year has been due to increases in the prices of energy."
The Fed may pause, but with oil recently hitting new highs and heading for our $82.50 target, stagflation will do anything but decline.
Today's 222 points mirrored the 199 points on 06/15 and 212 point upsurge on June 29th and we see what happened after those "turn arounds".
With the markets ignoring ugly housing market decline and inflation ridden PPI & CPI numbers, it looks like another short covering headfake to me.
Get ready for some "happy daze" hype from the brown shoe boyz on the street about how the market is "oversold" and there are "bargains" to be had.
The NDX & QQQQ's bounced off the 900 DMA, NAZ butting up into 600 DMA. DJIA lept off 400 DMA to slice through 200 DMA, NYSE slicing through 200 DMA.
SP500, TMWX, MID & RUT lept from 400 DMA to rest just below 200 DMA. OEX jumping from 600 DMA to slice through 200 DMA.
We see another fews days of sideways pennant waving for the indices, perhaps falling to MAX PAIN, then perhaps another big headfake day to the upside sans volume conviction followed by a few more days of flailing.
Watch 720-725 RUT for upwards resistance, then get ready for perhaps another 50 point or more slamming in rapid fashion to the downside as the suckers get taken again.
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