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It looked as though we might get some action in stocks today, and sure enough, on the 'better than expected' news from IBM the markets rallied hard, led largely by tech. Obama and the Congress threw the market a bone and hinted that there might be a resolution to the debt ceiling 'crisis.'
So far this is just a counter trend relief rally. It may have further to go, but a downdraft is just a news headline from Europe or Washington away, so be careful.
I suspect that this short term symmetrical triangle and intermediate "W formation" will show its hand when the US debt ceiling issue is resolved.
The fibo levels at 1307 and 1295 are powerful chart points, and the 1287 and 1322 indicators may be helpful in confirming any moves, sorting out the fakeouts.
Keep an eye on VIX and gold.
Gold and Silver have risen quickly to a very important resistance level. I do not yet consider this an achieved breakout.
There are strong cross currents in these markets, the global sovereign debt situation in Europe, and the less remarked situation in the domestic US, highlighted but not captured by the debt ceiling debate which is more of a showpiece than a serious change and prioritization.
I suspect that if the US comes to a resolution of its troubles, for a few days at least the markets will rally, and the metals and perhaps Treasuries will be beaten like rented mules.
However, the looming crisis in Europe, which has the banks salivating for cheap national assets, is going to continue to weigh on markets by posing systemic risk in the manner of Lehman Brothers.
And as a reminder, the August Comex Options Expiration is next week.
I thought it was interesting that the US dollar has failed to rally along with Gold and Silver, at least to the same extent of breaking out to new highs.
Robert Baer, a distinguished ex-CIA officer, published a warning from his own knowledge and sources about a regional conflict in the Mideast in September between Iran and Israel. For now I consider this 'sabre-rattling,' and if Baer had not chimed in I would not even bother to mention it.
I would keep an eye on any developments, although these concerns are not new. Such a conflict, if it occurs, would have some benefits to a powerful few, but pose a significant risk to the many. Macro events and crises such as war can be used to hide a multitude of sins, but like most deadly things involving the will to power, they sometimes are difficult to control for other ends.
The SP held the important support at 1295, and actually closed at the psychological number of 1300.
The sovereign debt situation around the world is hanging on the market, as well as the deteriorating domestic GDP fundamentals.
We are now well into earnings season, and we should find the push and pull of the short term and the macro to provide interesting cross currents.
In other words, this is a traders' market.
