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July 2, 2009
DJIA: 8,504
If you want to make God laugh
. . . predict stock prices. Although one prediction with a high probability is
pretty simple: trading range. After all, the market spends two-thirds of the
time going nowhere and that, as it happens, is pretty much what the S&P has done
for the last two months. Even Monday was more trading range than rally. Sure
the Dow rose 90 points, but that happened in forty-five minutes and the rest of
the day was flat. Granted it’s the end of the quarter and there’s rebalancing
after the rebalancing, but there’s always something. It’s never easy but it’s
easier to be observing than predicting, in this case observing 880 and 950 in
the S&P. We’re in this trading range, but the trend is still up. And at least
in any important way, the market is yet to do anything wrong – no important
divergences. And one might argue the market had its chance last week to break
880, the lower end of the S&P’s range, but didn’t. Holding up isn’t going up,
but it also isn’t going down. Taking out 880 might not be as important as we’re
making it out to be, but you have to draw the line somewhere and 880 would be
pretty much it.
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