Cypress: A Preview Of What Is To Come?

It took a small island nation in the Mediterranean to put the brakes in this runaway rally (to correct an “expert” I heard today, it is the banks in Cypress that are being bailed out, not the “socialist” government), but of course, we know that Cypress is not the cause, just a symptom of a problem that never got solved, just papered over. When you are talking about Greece and Cypress, that’s small potatoes, but when it gets to Italy and Spain, then we have something to talk about, and don’t even think about what happens when California blows it’s top. Anyway, the market has fallen short of the target of 1380, and we now have a new resistance level and are in the process of creating a new trading range. For now, it is the most recent highs and lows, but we will find another support level somewhere here. This downturn was inevitable, and now the market has a reason to drop, but so far, we have to assume this is a pullback, and can only hope we go low enough to get some good buying opportunities.

For once the Nasdaq actually took the lead today, and reversed the slow death march of it’s price relative line. That is one day, however, so I would not assume this is going to lead anytime soon. This did make a nice reversal of a very nasty gap down, and dropped the least in the late afternoon swoon.

The price relative on the Dow industrials continue to move higher in  price realtive, a condition that has never been bullish for the market. Never, that is, until about a month ago. Let’s see how long that lasts.

The Russell 2000 also has a mildly up rending price relative line. If that continues, I suspect we are in for another very mild and short correction here. Volume on the IWM indicates some pretty severe selling pressure, but so far it has been matched by the dip buyers.

News such as we got over the weekend rarely affects the market for very long, but this is almost certainly not to be the last of the draconian rescue attempts being made in Europe. Each time it happens, the Euro ges whacked, and the dollar rises, which will ultimately raise havoc in the stock market. We may be in for a long summer.

I will have the new highs update shortly.

2013-03-18 16:19:31

Source: http://samuraitrader.blogspot.com/2013/03/cypress-preview-of-what-is-to-come.html