China downgrades US debt? We are looking at an average guess of 9.2 for unemployment tomorrow. Currency wars are on, as Japan sells yen against the US dollar.
Vladimir Putin, the Soviet Union’s Godfather, calls the USA “parasites on the world economy”? really? where was he when Russia defaulted during the Clinton administration? Does anyone remember Long Term Capital Management??
So, looking at Dow futures, there is support at 11,451, which was the March 2011 low. That level also corresponds to old resistance going back to April of 2010. 10,916 was the December low from just 9 months ago.
Market’s will push until they find support. That is the one constant.
However, in thin summer markets, the moves should be extra volatile.
There will be opportunities to buy dips and sell rallies. Look to those major chart levels I mentioned above. Those will attract 1) panic selling and 2) contrarian bottom pickers. I am going on vacation in a week. I am going to put some straddles on, where its a volatility play. Market direction is secondary to market volatility at this point in time, in my opinion.
For the Grains, Why cant’ we get Dec corn above 7.20? Why can’t we get Nov beans above 14.00? What is the market telling us?
On a final note, I just pulled up a chart of the S&P Cash on a weekly basis.
A year ago S&P in july traded at 1,000. Then we rallied 372 handles to our May high at 1372. 1230, where we are currently, is a 38% retracement, or a fibonnacci retracement. We are below that level, however. Next support is the 50% retracement of the 372 handle rally, that level is 1187. Below there we have a 62% retracement level, which comes in at 1142. I’d be inclined to buy here on panic selling, but I want to have sell stops to prevent a total bleed out. Anything is possible, but its always a good idea to be heading the opposite direction of the herd.
But that’s just my opinion.
CER
CER