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Today’s Market Recap.

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    August 16, 2011

    Of my GOD that was a painful session. How do we go from rip your face off volatility to quite possibly the most boring market action this year.

    What amazes me about this move higher off the August 9 intraday low is how anaemic volume has been.  With markets vastly oversold as of last week one would expect decent volume but no such thing. Below is a daily chart of the SPY. Notice the volume during the selloff and during the recent move higher. There is nothing behind this ramp.

    As for where we are below is an SPX hourly chart and this move looks just about exhausted.

    Bearish divergence on the MACD (falling MACD, rising price)

    Overbought RSI

    Confluence of resistance approaching (50% retracement, 100MA and downtrend line not yet backtested)

    Falling volume

    If traders are going long or covering shorts ahead of Bernanke’s Jackson Hole speech on Friday do they realize markets are only 12% off their 2011 highs. There is absolutely no reason for the Fed to discuss QE, none. Edit – thanks to a reader the speech is Friday the 26th, not this coming Friday;

    No sense in reading any more into this move. Equities are the only asset class pricing in economic growth. As I type I foolishly un-muted CNBC and I hear Ron Insana talk about how forward looking equity markets are (what?), Mark Zandi talk about today’s equity price action and some guy with 160 billion in assets under management talk about how the economy is improving and stock fundamentals are solid. Seriously, who are these clowns?

    Can anyone who is bullish in this market tie in their argument with one single credit product, just one? Can they get off this nonsense about PE ratios or record cash levels. CNBC is back on mute and I will end my rant.


    Enjoy your day!


    Market Recap Monday August 15, 2011- Macro Story.

    Images: Flickr (licence details)

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