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Tuesday, February 21, 2012

Market Thought... interesting set-up

The market has approached an interesting set up. I don't really care about the Dow 13,000, but the SP500 near 1370 is more relevant to me.

Between 1350-1370 is an obvious technical resistance with the SP500.  We are now at the top-end of that resistance, after a spectacular (and justified) run up.

My last market post was 'magnitude', and imo, the same thesis holds.  The economic fundamentals remain pretty robust, and there is underlining strength.  Especially with the 10yr treasury continuing to sell off as the market rises. (But both the market and the treasury are controlled, which to me is very healthy.)

From a very short-term perspective, there may be a push-back in the treasury.

The market should see a short-term hiccup here, with treasury yields declining somewhat. The obvious support is the 14SMA. But if the current market consolidation is going to feel real, it should move to the 32 SMA or so, before it breaks the 1370 level.

The lower-probability scenario is that the market does not care for a pull back.  Then we should see a continued move in the treasury yield, and the market to push higher. (At which point I will nick-name this market rally 'unstoppable' :)

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