Market Thought
There are a lot of potentially market moving data coming out this week, the most important being the Fed Cut/Statement.
Excluding the data that can act as a catalyst up or down, the charts are suggesting a consolidation here. (This does not mean it has to go down, but given the market psychology at the moment… mostlikely.)
The dividend and transportation index are in near-term overbought conditions hitting resistance points.
I have not taken on any market shorts for the moment, as I still think equity prices are undervalued and a potential rate cut this week. I recognize the dangers of having the credit market freeze, especially to the investment banks, but with the Fed easing and global liquidity infusions, the credit markets should start ticking again.
Even with the credit markets ticking again, I am not expecting a bull market either. The state of the US consumer merits real worry, along with overall corporate profit growth. So far profits have held up, and if they do, I think the overall markets will be trading sideways until the credit market perk up.
I will start shorting the market again when the SPY sees 140. I will be averaging up, as I do not expect a breach from the overall negative trend to occur just yet.
