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Tuesday, April 21, 2009

Monday Market Rumblings

The market fell pretty significantly Monday, not crash territory. I posted last week that this was due. Also, I called it to happen on Friday or Monday at the open, as part of stock option expiration games. The market may rally Tuesday, but I think we will see lower levels before the week is out.

Part of the downdraft is a rumor that the Fed "stress test" yielded showing "Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent." (Based upon the “alternative more adverse” scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)

I for one believe this is true. However, I doubt the government will ever release such a report. Hence after the rumor was in the wild, reports from "credible" media sources was released, that banks are looking good, read here.

Anyway, that was todays fear news. Notice how far we have gone? Rumor that 16 of the 19 top US banks are insolvent, and its "whatever".

Lets take a look at some charts, first SPX from macro view, then 1 year, and finally gold.
S&P 500 since 1991, does this look like a bull or bear trend overall?
From WebSurfinMurf's Financial Blog

S&P 500 1 year chart, notice inded fell down to 100 day moving average back.
From WebSurfinMurf's Financial Blog

Gold Chart, just yesterday I highlighted gold breaking trend, today it moved up to 100 moving average
From WebSurfinMurf's Financial Blog

Notice when "Fear" returns, gold spikes. Gold may trend higher for next few days or couple of weeks, but I don't think its time to have the kind of fear we saw in fall of 2008.

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