Really Light Front Coming In

posted Sep 8, 2014, 11:23 AM by Katie Shook

This week is really light on the economic front.  As a result, geopolitics and momentum are the likely drivers.  The next data point that folks will likely pay attention to is not until Thursday.  And it’s a jobs number — a data point that’s starting to feel a little like the little boy who called wolf — as the labor force continues to dwindle and obscure the meaning of this figure.

So let’s look at how the market is shaping up technically…

Last Friday’s finish was fairly strong — enough so that the negative slide of the week was somewhat neutralized.  However, a lot of momentum was lost in the sideways move.  While we’ve seen some consolidation around the 2000 area for the S&P500 — and we are currently below the 21MALR — there are indications that a dip into the 1980′s (or even 1960′s) would not be out of character for this market.  It’s not because there’s anything particularly bad out there.  It’s simply because momentum is waning at this point.

The big area of support continues to be the 50-day moving average, with the 100-day moving average being even more significant (for the S&P500).  So the downside still appears generally limited (absent a more significant geopolitical event — perhaps terrorism related).  In fact, the BigFoot database is showing that now approximately 70% of its positions have long signals – up from a low of closer to 60% just a few weeks ago.  So we’re seeing some underlying momentum re-form here.

If I had to take a SWAG (scientific wild-arsed guess) at how this thing plays out, I’d say the pull-backs this year continue to be limited.  We may see a move down into the 1960′s briefly in the next week or two — and a bunch of folks will call for calamitous decline — then the cheap money thing will win out and the market will push higher.   In fact, I think there is potential for this thing to go up a fair amount from here before year’s end.  But again, it’s just a SWAG.  In the short term, there remains a lack of definitive direction or clear catalyst to move things either up or down.

How’s that for clarity?  Best to stick to the process over opinion, eh?

Daily Digits

Daily Digits 9-8-14

Weekly Estimated Range

Weekly Estimated Range 9-8-14

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