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Last week’s final recap on Wednesday I noted that buyers were exhausted and we should expect a pull back. Thursday and Friday saw volatility and all negative price action. To see us gap down this morning and rally back is a positive sign, however this is hardly a “contained” pullback and suggests cash is best at this time.
The expectation high for further stimulus (aka Operation Twist) has mostly worn off as it is mostly now baked into the charts. This in turn has the market once again focusing on Europe’s dilemma; vice the bearish price action. Below I have included a chart of the German stock market ($DAX) to give a bit of perspective on how the strongest country in the EU is doing compared to the US. If anything it suggests we should be making lower lows sooner than later.
Interesting Reads Today: Post office nears default (NYT), A look at Operation Twist (ZeroHedge), Massive unemployment chartfest (The Big Picture), Swiss pledge unlimited currency purchases (Bloomberg), 10 year treasury yield at 50 year+ lows.
Tomorrow’s Economic Calender: July Job Openings data at 10 AM (low importance)
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|Trend||Nasdaq||S&P 500||Russell 2000|
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.