Battle at Old Highs Wages On
The battle at the old highs between bulls and bears goes on. It has been quite a struggle to stay above 13,000 on the DJIA, get to 3,000 on the COMP, and to hold 1,371 for the S&P 500. That is where the short sellers seem to be comfortable loading up and pushing the markets down.
The testimony today from Bernanke seemed to disappoint many and the markets sold off hard mid morning. The treasuries spiked and the precious metals were sold off in extremely heavy volume. Both silver and gold saw very big selling and price moves down after the dollar bounced. Some rumored that this big move down was caused by a very big “fat finger” 10 year Treasury buy mistake but that has not been confirmed.
MR believes that the better data and Bernanke’s slightly optimistic comments had everyone selling on a lower chance of QE3. The QE3 would hurt the dollar which helps gold and silver. Without the prospect of QE3 in the pipeline, the dollar could firm up and precious metals would drop. Today’s selling is an over-reaction in our opinion so read our comments at the end of this newsletter.
Nothing has changed from our previous technical analysis of the overbought markets. But a strong push back above the battleground levels mentioned above would cause short covering and another push even higher. Depending on the strength of any breakout, we can’t rule out 1400 or higher for the S&P 500 in March. But we also can’t rule out a 3 to 7% selloff as far and fast as the markets have climbed. So the 20 SMA trendlines are still the key to our next recommendations.
The markets are really in a wait and see mode right now for traders and investors. Let’s see what happens in the next few days trading and MR will reassess the situation in our MR Power Stock Newsletter on Sunday.
For now, MR posted several blogs on China on the website this week that have quite a few aggressive but attractive China stocks to choose from. These stocks are speculative in nature so use small amounts of investment money. However, many of them could be huge winners with some probably doubling or even tripling for the 3 year investor. The key will be to be very patient and to buy market and stock pullbacks.
Because of the numerous China stocks posted on some of our previous blogs, we are not including any power stock picks in this blog.
Investor Notes:
Keep an eye out for a new blog on gold and silver this weekend as this unexpected sell-off could be a good buying opportunity. Let’s see where the bottom settles. Both gold and silver may see a big push higher for the rest of 2012 due to some big changes in the commodities markets in China and Hong Kong. Stay tuned.
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Good luck in your trading and investing,
CEO Jalexa Trading Consultants, LLC
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