Things are getting interesting, to say the least. Today, we rallied even though oil kept creeping up (remember, lower oil was one of the so-called "reasons" to rally into the fall) and financials were taking a hit. Higher energy will fuel more inflationary talk (gold is definitely pointing the way: I have been pounding the table on gold for some time, I hope you bought some) and the inverted yield curve occurrences this year are starting to raise the curtain on stagflation (slower growth and inflation). After the bell, we are seeing some selling pressure, but don't expect any mass exodus quite yet. That might have to wait a week or two, but be forewarned, it is coming. Once they funds have put in their numbers and gotten enough new clients to fuel their outrageous bonuses, the kiss goodbye will be right around the corner.
For now, I expect a retrace for NQ and ES to respective weekly pivots, 1723 and 1366.50. I would not count on much lower than that as put support is building at QQQQ 42 strike, although at this point it is a toss up as to how much lower than 42 we could correct. Nevertheless, they will try and run the Q's to April's high of 43.05 at some point this week.
SPX (chart) stalled at 1370.20 just shy of 61.8% projection September (1370.78) and not coincidentally home of SPY 137 call resistance, so bulls are getting their work cut out going forward.
This entry was posted
on Monday, October 16, 2006 at 5:35 PM.
