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Thursday, May 5, 2011

Follow up to this morning's post...

Interesting that the trendline responsible for this morning's bounce continued to play an important role all day long.  We mentioned this morning that it currently stands at around 1335. 

While SPX was all over the map today, it respected this support and closed at 1335.10. 

Also, we've had 4 red candles in a row on the daily.  There haven't been 5 in a row since July '10.   While I'm certainly bearish in the medium and longer terms, I continue to feel we have one last push up before we're done with P[2].

Whether we get there from this trend line, or from the lower end of the rising wedge isn't terribly important unless you're a day trader.   Key support remaining, in order: this trendline, the 1294 April low, and the 1280ish rising wedge.   I would selectively add to short positions if/when each of those supports is taken out.  In the meantime, I am modestly long as a short-term trade.

Several fed gov's were in the news yesterday, practically guaranteeing a +200K employment number for months to come -- stated with the kind of confidence that makes one wonder if the fix is in.

Look for a positive surprise when tomorrow's payroll/unemployment numbers are released.  It will go a long way in reaffirming why today's data was anomalous (how many bus drivers could be on furlough at once?) and doesn't really count.

The key question:  are market participants gullible enough to buy it again?

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