The first day of a new quarter, it’s April Fools day, the futures are up on heavy losses, and they have a chicken on CNBC this morning. Oh what is this world coming to?
The way I see this current situation is that the bad news released by UBS and Deutsche Bank overnight is a sense of "the kitchen sink" has been thrown out the window so all is up from here. Sounds like a perfect trap being placed to castrate the bulls to me.
Remember that rallies in a bear market are historically always violent and large, to only end in disappointment for those that are bullish. We have a lot of resistance at multiple levels overhead so any rally is likely to be a gap up and then flatten out. We still have ISM data to come out at 10:00 am and it is still a very long week of significant economic data to come. Don’t get excited about bear market rallies.
See the hourly chart of the S&P 500 below:
(S&P 500 Hourly Chart)
Ascending triangles resolve to the direction that preceded them, so in this case we will look to see a resolve to the downside in the near future.
Don’t forget about the recession, which is showing signs of still getting worse…
ICSC/UBS WEEKLY CHAIN STORE SALES W/E MAR 29TH: -0.2% W/W, +0.5% Y/Y
- Lowest Year over Year reading in eight years
2 Comments
April 1st, 2008 at 11:06 am
This rally is happening for all the wrong reasons but why should that surprise anyone. Whatever the case it seems we are approaching some very key resistance levels on many fronts. It will be interesting to see how this plays out.
April 1st, 2008 at 11:22 am
Morning, Chuck,
Bought the SDS at 61.32.
Have a Great day,
Noel