Thursday, May 19, 2011

the 1335/1340 Hinge

Market blew through the hourly resistance yesterday and pulled up to the daily ~ 1340. In the last several months - the market has traded along the 1335/1340 hinge with great reflection on both sides of the tape. There should be a resolution regardless of the comparison study in the next few sessions. 

Food for thought - will know soon enough if this is just misapplied cognitive bias. The analog to the 2007 tape works in the sense of a momentum driven market - not comparing economic conditions per say, although the recent action in the financials is noteworthy. I have been trading around it and waiting for a resolution (negative bias).

Overall, the equity markets are currently reflecting impressive relative strength to the dislocation in the CRB and the bleeding weakness in the financials. Anecdotally, the market has a way of fooling the obvious and will likely follow the commodity market lower - it's just a matter of timing. Analogs such as these reflect similar momentum internals - the difference in outcomes typically relies on an extraneous catalyst or lack there of. Stay Frosty. 

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(Positions in UUP & TZA)

Disclaimer: This is not investment advice. Always do your own due diligence. Erik Swarts is not a registered investment advisor. Under no circumstances should any content from this website be used or interpreted as a recommendation for any investment or trading approach to the markets. Trading and investing can be hazardous to your wealth. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor.