Wednesday, August 11, 2010
Is Ben The Alpha Male in the Wolf Pack?
On June 29 I warned of the power of the Wolf Pack and its impact on the markets. I suggested that I believed that they would come out in mid summer and feed again. On July 17 I wrote about the Wolf Pack feeding again and suggested to my readers that if we didn’t close above the 1110 level on the S&P 500 then the downside could be 850 or so on the S&P 500. If we did close above the 1110 level then it was most likely that the low would be 950 to 975. We closed about 15 points above 1110 so I’m not sure if that 1125 level is good enough to hold the 950 low.
Over the last week we have tried three times to break above the 1127 level on the S&P 500 and each time we fell back. Yesterday the Federal Reserve Open Market Committee told the market their view on the economy and in essence they said, O Sh!! We are in trouble; The markets reacted with a significant sell off in stocks around the world on Wednesday. The demand for US Treasuries, the flight to quality, drove the yield on the 10-year to as low as 2.62% inter day.
I expect that the summer rally is over and we are in the correction I have been looking for. I do not expect panic selling, but a movement down and up into mid September when I think we will hit the 950 to 975 level. We will have to watch and see what happens over the next two weeks to see if the 950 level can hold,