Sunday, November 15, 2009

The Importance Of 1100 For S&P500

S&P500 Technical Analysis chart:

We are at the critical levels. 1100 coincides with October high and the upper side the channel-1. If bears want to push the market lower this is the time to do it, but this week is Option expiration week therefore bulls should have the upper hand. It means we should move side way or slightly higher, but market is not rational so anything is possible. I would be in cash and wait to see what is going to play out.
On the other hand we are right above the diagonal support (see the chart in purple). S&P500 violated it 2 weeks ago but bulls managed to squeezed the short and by trapping bears caused a big short squeeze, so far they did it 5 times (see the chart blue cycles) , this game is getting too obvious. I don't know how long bulls could play this game, but Wall Street is famous in surprising investors. Since March market never staid over sold more than a couple days, this is one of characteristics of bull markets.

We got the consumer confidence data on Friday , it that was much lower than forecasted but big institutions managed to ignore the bad news and pushed the market higher. Recently we witness market rallies in face of bad news; this is not anything except market manipulation by big institutions. They had tough year in 2008 and they lost many clients therefore many did not participate in the rally until late May and they must play catch up therefore they try to finish 4th quarter positive to show to their clients that they did not fall behind, otherwise they must look for a new jobs.
Cheap dollar acts as carry trade it means investors can borrow in dollar very cheap and invest in other assets like commodities or stocks which pushes the price higher but when you look deep you see this is nothing more than asset inflation not the recovery that Wall Street is talking about.

The other week, we got the unemployment report. If you are one of my frequent readers you must seen the unemployment table that I posted the other week.
Here is the link:
It shows the real unemployment at 17.5% Wall Street crooks may fool average investors by talking about "jobless recovery", but there is no such a thing exist in real world. This is the creation of wishful minds of Wall Street that's all. Let’s see when this house of cards is going to fall apart.