Technical Talk: Window Dressing Over
The comments below were provided by Kevin Lane of Fusion IQ.
Like clockwork the market was lower intraday yesterday [Wednesday] and then rallied to close well off its lows as end-of-the-quarter window-dressing assured stocks closed strong.
Today [Thursday] is the start of a new quarter and the next few days will be interesting in terms of the trading tone. We believe the predominant voices in the crowd are still from those calling for a correction and that those calling for a bullish continuation are very few and far between. With so many cautionaries we continue to believe liquidity is high.
However, we know the tape is the ultimate determinant, not opinion. That said, new highs remain fairly strong having peaked only just a few weeks back. Typically near corrective tops new highs will have peaked long before the index price peak. So far, however, the new highs have moderated but there are no glaring divergences between news highs and the underlying indices that would suggest the floor underneath the market is weakening significantly.
The S&P 500 has near-term support just below present levels near the 1,040 to 1,038 level. If that gives way the trade will turn corrective for a while.
Source: Kevin Lane, Fusion IQ, October 1, 2009.
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