Sunday, June 5, 2011

Current Outlook 06 05 2011

The market has now fallen for five straight weeks. The chart below indicates that the S&P 500 is at the critical support level right now. A push below the April lows, around the 1297 level, would indicate a potential further drop to the March lows of 1250.

The economic headline news has been horrible. As you have no doubt heard on the news, the US economy is slowing and jobs for Americans remain a big problem.While a deal to bail out Greece has been struck it appears that the cost was under-estimated; instead of 60 to 80 Billion it now looks more like 100 Billion.

The large candlesticks on volume in the chart below indicates that the institutions are in sell mode; this is confirmed by our Effective Volume studies. It is never a good idea to bet against the big money.

Much damage has been done to market structure and it will take time to play itself out. It may very well take much of the summer for the market to build a base.

Risk is very high at the moment. We currently have minimal exposure to stocks and high yield bonds. There are times when it is best to simply remain on the sidelines.

This blog post does not constitute an offer of investment advise. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

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