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Tuesday, August 28, 2012

Daily update 8/28

Another day of listless action.  Here is the daily SPX chart for what it is worth.

This morning SPX went down and tested its 18 SMA again, and held again.  However, today's bounce never got above yesterday's high.  There are dip buyers out there, but the bulls are not ambitious enough to chase price higher.  Check out the 60 minute SPY chart.

We ended the day back below the 50 SMA and with a red price bar.  This should increase the odds of follow through on the down side if we start down in the morning.  Neither the bulls or bears are very ambitious at the moment.  Until one side gets motivated we could drift around.  That may persist until we get Bernanke's speech Friday at the Jackson Hole conference.  I think this is a case of nobody wants to sell in case he mentions QE and nobody wants to buy in case he doesn't. 

There is more economic data this week, but is bad news really good news or not.  Bad news seems to fuel hope for QE, while good news dashes that hope.  The Dallas FED put out a paper titled "Ultra Easy Monetary Policy and the Law of Unintended Consequences".  You can read it here.  http://www.scribd.com/doc/104109398/Dallas-Fed-QE  It is clearly an attempt to say the Dallas FED does not believe in unlimited QE like some FED members have been talking about recently.  I still have a hard time believing the FED will do any more QE until after a market crash, but I guess we will see.

In this thin market trade extra carefully.

The chart practice site has been updated with my annotated chart.


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