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Market Review: S&P ETF Breaking Below Key Support Level
If you looked across all the indexes today we are seeing movement to the downside across the board.
The Dow today was down .81%, the NASDAQ down 1.52%, and the S&P was down 1% and one of the reasons we saw this was because of the Alcoa earnings which reported a loss of $143 million dollars, and the general expectations that earnings may not go very well this quarter.
As I have watched the S&P stall out here just below $141 there are some very interesting technical readings that are flashing sell signals. When the S&P climbed from 1160 to above 1400 from December to April the Relative Strength Index (RSI) went from a bearish reading and steadily climbed along with the S&P to where it became overbought, which is typical for a momentum indicator in a strong uptrend.
There hasn't been a lot to talk about the last few days in what is making the market move. Oh that's right it's barely moving which can make trading a bit difficult. Not to fear I have been saying the last few days we are close to get some pullback. I know I have said that for two days straight and into a third, but the technical levels are revealing that things in the market should be pulling back soon. There a couple of good reasons for a pullback right now.
Fast and Furious is what today was. When the ECB announced their short term plan to deal with sovereign debt the market did not like what it heard. Last week Mario Draghi was saying that the will do everything in their power to prevent the collapse of the Euro, this was not viewed as doing everything and so the market sold off. The takeway today was it could have been much worse. The Dow was down almost 200 points intraday, but by the close we were only off 92 on the Dow and 10 on the S&P.
Initiating new positions would not be a wise thing to do tomorrow with the FOMC statement coming out tomorrow anything could happen. The market has reacted to some policy statements with indifferenc, but with QE3 on the mind of the Fed and the markets its 50/50 how things will play out.
believe the market is ready, and almost begging for QE3 and some action out of Europe and that is why the market has been bouncing of a technical support level. Just as things seem to be on the verge of getting bad. The central banks are in prevention mode of keeping Europe and the rest of the global markets from falling into the financial abyss. I am glad that they are I certainly do not want to see as bad a crisis as the U.S. went through in 2008.