Market Stuck in a Rut « Market Montage

Well it certainly has been an interesting week.  With Sandy shutting down the market for a few days and yesterday's action focused on nothing but "storm plays" (that will be forgotten about in a week) we seem to be in a holding period.   When the market wants to sell off or finally commence its oversold rally, it will find an excuse.  That could be today's ISM Mfg #s at 10 AM, tomorrow's employment data, or the election next week.  In the meantime, it is sort of driving both bulls and bears nuts as after a break down early last week there has been little movement as the indexes hover but don't break down or dead cat bounce.

The S&P 500 has been basing in what appears to be no man's land after breaking below April 2012 highs of 1422.  However, on closer inspection it has bounced off the 20 WEEK (not day) moving average last week and this week.   Meanwhile the NASDAQ has more obviously been bouncing along the 200 day moving average after a horrid month of October (-4.5%).

Apple is a major culprit there of course as it also has fallen all the way to its 200 day moving average.

At this point we might be creating a bear flag on these daily charts – there were two major days of pain two weeks ago Friday and then a week ago Monday, and since then the days the market has been open have been range bound.   Of course there are some major catalyst moments in the days ahead and shorts realize that in these type of markets there have been many days they have woken up to a +1.5% overnight gap as Bernanke said this or Draghi said that or a report is released in premarket that makes everyone giddy.   So the market is certainly not making it easy on anyone  - the buyable swoon that creates a simple oversold bounce just never is delivered.  That said, a lot of damage has been done to charts the past few weeks and it will take many weeks to repair and create new bases.

I'd also like to highlight copper here which has changed its tune significantly in the past few weeks.  Unlike oil which was weakening well ahead of the indexes, copper was sticking in there during September and early October.  Now it has shown the same weakness although it sits on a support level in the very near term much like the indexes.

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Any securities mentioned on this page are not held by the author in his personal portfolio.