The trading session on August 5, 2013 was extremely quiet. The tempo was slow, and the moves were measured. Buyers were unwilling to take the market higher, but sellers were not strong enough to bring it lower. SPY closed in the middle of its daily range.
Last month, we noted that we thought that the SPY might make a lunge over 1700, then be exhausted and fall back. That remains a distinct possibility, especially given the day's indecisive trading. Being all cash, we are waiting for a direction. We are in buy the dip mode should the market weaken.
Just because we expect a pullback does not mean we are suddenly becoming Bearish in the intermediate term. Should the market drop, we would buy when it looks safe to do so. There are larger forces in play that are keeping this market rising that are likely to frustrate anyone looking for a sudden move back to the 1500s. Below is a chart and a video from Rick Santelli of CNBC that pretty much sums up our view of why the market is rising, and why that is likely to continue for the time being.
Courtesy of wallstreetexaminer.com.
Here is Rick Santelli of CNBC explaining the chart.
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