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MARKET DIRECTION CALLS
August 2 2011 - Selling Intensifies
August 1 2011 - Bear Returns
July 28 2011 - Before The Open
July 27 2011 - Down But Are We Out?
July 20 2011 - Stock Market Volatility
July 18 2011 - Investors' Nervousness
July 15 2011 - Earnings VS Bleak Data
July 14 2011 - Below 1310
July 13 2011 - Ugly Looking Chart
July 12 2011 - Razor's Edge
July 8 2011 - Nasdaq Leads The Way
July 5 2011 - Expected Weakness
July 1 2011 - Overbought
Jun 28 2011 - July Rally?
Jun 27 2011 - Mixed Signals 
Jun 21 2011 - Bottom Or Bounce?
Jun 16 2011 - Raising Cash
Jun 15 2011 - More Downside To Come?
Jun 14 2011 - Bounce or Bottom?
Jun 12 2011 - Batten Down The Hatches
Jun 6 2011 - Bounce Sometime Soon?
Jun 2 2011 - Sell Signals and Warnings Everywhere
Jun 1 2011 - How Bad Could The Selling Get
Jun 1 2011 - Tread Carefully - Markets Remains Overvalued
May 31 2011 - Success - 100 Day Moving Average Tested
May 17 2011 - Be Careful Out There
Apri 18 2011 - Two Bears Compared
Apr 13 2011 - Why I Bought Puts Today
Apr 4 2011 - Breaking The February Highs
Mar 16 2011 - The Art Of Being Wrong
Mar 15 2011 - Market Remains Resilient
Mar 11 2011 - Trend Is Down
Feb 25 2011 - Trend Turning Bearish
Feb 11 2011 - Still Up - But Watch For June
Jan 3 2011 - Trend Remains Positive
  MARKET DIRECTION CALL
S&P 500
May 31 2011 - Success: 100 Day Moving Average Tested

The market has pulled away from the 50 day and since March it has tested the 100 day three times. As I mentioned in my May 17 market direction call, I believed the indexes would test the 100 day and they have. Each time the S&P 500 has pulled away from moving lower and continued higher. The Ultimate Oscillator is pretty well neutral with a slight bullish bias and MACD while at a divergence of -0.93 which is quite negative, appears to actually be turning back up. The market could rally for a few sessions or even a few weeks. The market direction presently is no longer down but seems to be up. While it is always difficult to trade the market, what this picture actually provides to me is comfort in continuing with my selling puts on the large cap, multi-national companies that I follow.

 

Meanwhile though the sentiment remains poor. The US economy remains in trouble. Case-Shiller home price index dropped 3.6%, which is joined by consumer confidence moving lower to 60.8 and the Chicago PMI falling to 56.6. Basically the economy is plodding along and shows no real signs of robust activity. Multi-nationals continue to make money due to the US dollar remaining low.

 

Today the US dollar moved lower and commodities moved higher. Any significant rise in the US dollar is met with lower stock prices and often commodity prices. I have written a number of articles about the coming end to the Federal Reserve's stimulus in June. The first I wrote Feb 11 2011 entitled Market Trend: Still Up - But Watch For June and the second I wrote Apr 16 2011 entitled Dance Near The Exit. You may want to read them as I believe once the stimulus package is over, we could see some volatility or some pullbacks in equities, bonds, commodities or all three, as your guess is as good as mine when it comes to what may happen next.

In Europe I still believe it is just a matter of time before Greece defaults and restructures. Who knows they and the smaller Euro members like Portugal, Italy and Ireland may even leave the Euro Union. If they do, it will be a calamity for stock markets around the world. Don't believe anyone who tells you that the Greek sovereign debt issue is already priced into the market and the Euro, because it isn't.

Below is my chart for May 31 2011. Based on the technicals I think we could see a nice neutral to uptrend in June, but after that all bets are off until I see what the charts and sentiment look like. Remember any bad news will drive this market down, but this bull is still not dead. I remain using the cautious bull strategy  


May 31 2011 SPX

 

 

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