Yesterday was an extremely busy day for me. We are giving a new look to our official web site and it took all my time.
Coming back to the market, it does not look good at all. The market opened strong but closed weak.
There is huge resistance around 1200 level in SPX. May be people are selling the rally. I think it is time to get back in cash by Friday, which is the OPEX. Historically August expiration has been bullish lately, DOW up seven times in a row. But I think the upward momentum is losing steam and the lows will be retested.
The Franco-German joint statement was possibly the 1st indication that France will save its skin when push comes to shove. Their joint statement made some demands regarding fiscal stability and sovereign policy, which only few in Europe can match. There is no mention of Euro-Bonds. The irony is that Germany fought two world wars to win over what is Europe. Now they effectively control the rest of Europe and they did not have to fire a single bullet.
My favourite chartist Chris Kimble has this chart to share.
The similarities between 2008 and 2011 are eerily similar. But the market has to churn in that grey rectangle area few times, before it can roll over. I do not see any chance of the indexes going up without any further stimulus from the FED. That seems highly unlikely today, unless the market tanks a good bit and all the highly popular (13%, no less) leaders in Washington lose half the value of their portfolio. Then there will be a bipartisan call for action and we shall see happy days again, even if for a short while.
