Wednesday, February 22, 2012

02/22/2012 Market Recap

Is that a red candle I see on my screen? Nah, it couldn't be. Could it?

It turns out my eyes were not deceiving me and most indices did indeed manage to finish in the red. And by more than a few ticks! (though still not by all that much).

Our favourite index to watch, the S&P 500, shed about 4.5 points on a low volume day. But the index was notably more volatile than the average of the last few months. This is further sign of weakness and we expect that selling pressure will increase over the next couple days going into the weekend. That said, this market has been bullet-proof for going on 3 months now and there are a lot of powerful forces working to keep this puppy propped up in an election year and betting against that aggressively can be awfully risky (and costly).

Small-cap and Tech indices saw the worst of the selling as money continues to move out of small-cap, speculative stocks into large-cap blue chips. I read this development as a bearish sign as well but these indices were a tad overheated so this could just be a cool-off period before the next leg up.

Gold exploded upward today and is reaching its nearest resistance level at that round number of 1800. If it can convincingly break through there then it's obviously off to the races to challenge those August nominal highs. The gold market is laughably broken and corrupt these days though so unfortunately, I have no strong conviction one way or another.

Stay safe out there!
And remember; humility and an open mind are absolutely crucial to surviving the financial markets so whatever your view is, don't get too attached to it. And be ready to change your strategy on a moments notice.


No comments: