Wednesday, June 17, 2009

A Change In Market Character? Or Just Intense Options Pressure? (As Usual...)

For the technicians, after two days of selling, the S&P 500 did an almost perfect bounce off its 50-day simple moving average around 906. Unlike many of our prior bounces, the buying today didn't possess much vigor. The shorts weren't squeezed this time, and the momentum chasers didn't rush to join the charge. It just looked like a pretty standard oversold bounce, and we even fizzled in the final hour and ended up with a flat day for the indices.

Could it be that the best test of whether or not this market is ready to roll over harder will come on a bounce attempt? My own pea-sized brain keeps telling me RIMM's report tomorrow is pretty important, short term. If the dip-buyers weren't as aggressive and the shorts had more confidence, then we'd possibly be looking for some downside in the near term. The evidence today seems to suggest that this might be the case.

I'm wondering if we are are undergoing a change in market character. However, I don't think the market will be anywhere nearly as bad as it was back in February. Obviously the key is simply to pick good stocks. Simply betting on the index here and in the short-term future may not be the way to go. Gold finished the day strong, and it'll be supremely interesting to see where that price level goes.

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