Saturday, August 6, 2011

Correction Target

Above is the NYSE advance-decline line with its 200 day moving average. On Friday, the moving average was penetrated although the line closed slightly above it. This is the first time in the bull market that the 200 day MA was tested, usually producing the strongest bounce. This, along with Friday's price action, suggests that a rally is due, anywhere from 1250-1300.


  1. George, do you think the S & P downgrade is already factored in to the market or will it cause more selling on Monday morning? Just curious about your opinion.

  2. Rob, my best GUESS is that the downgraded is factored in because Standard & Poor's specified the conditions for the under which it would not change its ratings, and the debt package fell way short of those conditions.

    Your guess is as good as mine regarding price action on Monday.

  3. George do you have a view bout the probability of a Q3 announce in this context?

    Anon :)

  4. I have a very high degree of confidence that Bernanke is strongly influenced by stock market behavior. Price drops have pressured him to act in the past. If weakness continues throughout the coming weeks, I say it increases the probability of a QE3 announcement or of some other method of stimulus.