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Not a constructive day for the bulls. Let's see if they can gather themselves together tomorrow. If not, downside beckons.
The intramurals in Washington are shaking the confidence of the markets. The House Republicans are starting to resemble economic brownshirts, in the radical service of their masters, the monied interests.
"Government has coddled, accepted, and ignored white collar crime for too long. It is time the nation woke up and realized that it's not the armed robbers or drug dealers who cause the most economic harm, it's the white collar criminals living in the most expensive homes who have the most impressive resumes who harm us the most. They steal our pensions, bankrupt our companies, and destroy thousands of jobs, ruining countless lives."
Harry Markopolos, Madoff Investigation Congressional Testimony
The 'good news' from IBM and especially a hint that the debt ceiling talks are making progress rallied the market hard today, as the shorts scrambled to cover.
It was 'risk on' and gold and silver were hit hard in a cheap shot on weakness, in the manner of a calculated bear raid as the Comex closed and the thin Globex session opened.
The dollar gave up a little more ground.
Nothing is resolved in Europe, and the debt ceiling crisis in Washington is highly artificial, more of an ideological impasse, or even coup d'etat, than a genuine crisis.
Let's see how the correction goes. Just for reference, gold has had its strongest rally off support since 1980, so a pullback is warranted and expected here.
As a reminder it is option expiry on the Comex next week.
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.
