Today’s movement was further evidence that the world markets have intermingled to a point where everything moves in lockstep. We opened moving down and hit that 1180 area before making an attempt to advance back to the until the Merkozy press conference yielded information that the market didn’t like. We were expecting some kind of euro bond but were left disappointed. After that disappointment we headed straight back to the 1180 area and then started moving back up towards even. At about 3:15 we set up a bull channel on the 15 min chart and have been following that so far.
We had yet another hammer set up today on the daily chart indicating a potential reversal (all reversal patterns require confirmation). Confirmation would occur if we close tomorrow below that 1180 low we put in today. I don’t think this is very likely. Although the Di + turned sideways, the MACD and stochastic remain bullish for the short term. I expect that we will move back up after people have shrugged off the Murkozy info and head to about 1210-1220 tomorrow before moving closer to the 20 day moving average or the neckline.
Today we also have the S&P 500 bullish percent chart for you. This is a very good indicator of reversals and “contra” trends (contra trends are short term reversals). It called the reversal from our head and shoulder pattern and is showing a short term contra trend today. This remains in bullish direction for the moment. I expect that we will advance on this before reversing back to the long term trend at around the 25-30 area.
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