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August 19, 2009

Break or Fake?

The bears aren't getting much fodder in present action. Our narrow-range consolidation setup was negated today as price took out the top of Monday's candle and also re-entered the previous consolidation zone. Unless the SPX immediately reverses to give us a fresh close below that zone, Monday may prove to be a false break... a possibility I suspected due to the dearth of volume under that candle.

s&p 500 chart

Even if we do break lower again, there is really no reason to get aggressively short until the SPX loses the 65DMA. Also note that the dollar is struggling to regain our important pivot:

dollar chart

No need to take sides until one of those pivots is taken out on a closing basis.

stock market indicator

Treasury prices have recently broken to the upside:

treasury bond prices

Once the counter-trend move appears complete, I'll take another stab at TBT to try to capture the next impulsive move lower in what I believe is a long-term Treasury bear market.

As for precious metals, there is nothing new to add. As long as gold holds its 80WMA, I will be holding my positions.


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