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January 10, 2009

Evolving Framework

Friday brought a bit more slippage in equities on the heels of a jobs report which, given that it wasn't out-of-line with expectations, probably had nothing to do with the action. The market continues to behave in a corrective fashion and until it makes some sort of seriously bearish move, I am going to persist with my stance.

On the daily view, we see the SPX finally slipped below the 65DMA...

stock index chart

...while the hourly view tells us that the correction is not quite done. The initial trend line off the November low has now been cracked, which is typical for a corrective phase:

stock index chart

The banks have lead this entire bear market lower, and their recent behavior does not bode well for the intermediate-term view:

index chart

The banking sector has been a leading indicator for this bear market, so while the current breakdown does not necessarily mean the broader rally out of November is finished, it does provide another big clue that the overall bear market is far from complete.

Commodities, I believe, are also in the process of manufacturing enough hope to deliver a mother of a sucker punch later this year:

commodity chart

Of course, the CRB will go nowhere without oil, so as obvious (too obvious) as it seems, maybe this potential head-and-shoulders pattern will actually resolve for crude:

oil chart

It's just intuition whispering in my ear, but I have a notion that gold will spend the next couple of days making a dive toward the lower trend line:

gold chart

Platinum, which has served as a reliable leading indicator for precious metals prices, has completely ignored the recent hesistations of gold and silver:

platinum chart

As far as my commitment to all this babbling, my positions are fairly light at the moment. I have a couple small longs remaining, as well as the Autozone short. The market is simply too jumpy for any buy-and-hold methodology to be workable for my disposition, even on an intermediate-term time frame. My plan is to continue to evolve this framework of expectations and take shots when I am afforded a clear view.

 

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