Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
After the three day selloff in early March – which turned out to be a headfake rather than leading to what has happened in April – discussion of “sterilized bond buying” led to a flurry of buying on the 8th. That morning the major indexes gapped up – for some reason stockcharts.com doesn’t show these gaps on the S&P 500 chart, so I will use the SPY ETF chart. On March 6th the market closed at 135.91 – which has just been filled. (equivalent to S&P 1359) It had gone within 0.04 points of that level earlier in the afternoon (135.95) before jumping back up for an hour or so.
For those who have been reading a long time you know my philosophy on gaps… on individual equities they need not fill for a long time (nor ever) but on indexes they almost always fill, and within a period of a few months. This one took about 5 weeks.
Bigger picture however, the index is in a no man’s land between the 50 day moving average of 1370 and the next real support of 1340. Putting aside the cadre of ‘teflon stocks’, many other areas of the market are getting quite oversold in the very short term.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
