The slow methodical rally last Monday pushed through resistance areas like a bulldozer in low gear. Not a typical type of action for a bullish move but rather a typical manipulative action of massive computers. The bonds were actually in a divergence as they were in the plus column as well as stocks. They did not allow a pullback to get us a good entrance for a long position. They were technically oversold in the short term with the 128 ’12 area being a major support.
Each and every day I correlate the S&P with tick throughout the day. Tuesday the S&P price action was up while the tick did not share its enthusiasm. Basically the internals have turned very negative once again the same as the price action was at the 1700 level before the correction. The fact that Obama has conceded that Putin has more influence than he regarding Syria is noteworthy for the long term. This situation demonstrates the lessening power of the United States throughout the world. I think 9-11-13 is a sad day once again for America.
This market appears much like a 40 year old baseball player without steroids. His swing is slower, his power is less, and his foot speed has diminished. That describes Thursday’s action where the rallies were slower with less power as this market does not have the youthful zest that it once had. It just didn’t have the juice! I am sure the Federal Reserve has been injecting steroids in this market for a considerable length of time and perhaps it is time they are busted.
The 30 year bond auction is now completed so we should see a different environment for several days following. Technically we journeyed above 130 but have not hit the key resistance at 131 as of yet. The short term is oversold so keep in mind that any better than expected news could create a 2 to 3 point rally that could have staying power.
Note in your diary that the volatility is contracting into an abnormal tight environment. This is always a precursor to a major day and movement. The manipulators have tried to tighten down volatility but that always escapes containment. Therefore soon we will see some wide swing days as the tick will expand also. An environment as tight as the current one is never healthy for the movement that immediately follows since the energy builds and needs to be released. Look out and be very careful.