Friends
Beware of labels. This morning stocks fell into “bear market” territory on the S&P 500 (down more than 20% from the top) only to rally to the plus side by midday. As the afternoon wore on, stocks fell again as delays in the “Greece” situation and little news from Dr. Bernanke’s testimony to Congress left traders uninspired. Then, out of the blue, the Dow Jones Industrial Average, which had been down some 250 points, rallied hard to finish the day up 153 points. The S&P 500, down most of the day, rallied to close the day up 24 points and finish at 1123.
The other big news of the day was out of Apple with the anticipated release of the iPhone 5. The problem was that there was no iPhone 5, just a new (but pretty dandy sounding) operating system for the iPhone 4. Anyway Apple shareholders were disappointed and the stock sold off but recovered in the last hour.
Back to our discussion of labels. Whether a certain number was reached or penetrated or whatever, it doesn’t take a label to tell us that the markets have been very difficult for the past few months. Down 20% is a “bear market” officially, but isn’t down 19% just as painful without a label. Anyway, labels have a tendency to cause people to make bad decisions. Defining or labeling what just happened is not nearly as important as determining what comes next.
We continue to monitor the technical levels of the S&P 500 as these markets, not knowing what the fundamentals will be, adhere to these levels like religion these days. As we broke 1101 on the S&P, 1070 was the next support level to watch. Guess what, we traded very close to it early this morning and then bounced off it. It was nice to finish above 1120 which for 10 seconds had become the next resistance level to the upside (previous support becomes resistance) and 1101 may be our pivot point. Of course, we’ll see if the market can follow through tomorrow.
We’ll keep you informed as the news warrants. Have a nice evening everyone.
