After the initial dead cat bounce thru about 10:30 AM the market has retreated and sits near day lows. As you can see in the intraday 5 min chart below, the index has not been able to muster a bounce to even get through its 20 period moving average (light blue). This is a sign of weakness. A reversal of that pattern would be a change of pace, at least in the short run. EDIT 1 PM – As I post this of course the first push through the 20 period moving average happens within 10 minutes as Reid talks.
Pulling back to the daily moving average there are a host of supports at the 1420 to 1422 levels from April 2012 highs, 20 week moving averages, and the like. So a break down and close below 1420 makes the technical picture even more murky than it is now. That said, after such a gap down the pattern has been at some point in the coming week or two to see the reverse and those who sell out will be bemoaning – that has been the playbook repeatedly the past 3-4 years. This year in particular – since Apr 2 (the first day of the 2nd quarter) almost all the significant upside moves have come via overnight gap ups. Of course that works great until it doesn't.
Looks like Reid and Obama are next to speak today. The parade of politicians prancing daily is getting very tiring…
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