Super Stubbornness

Article originally published on kirkreport.com

Good morning. Futures are under pressure following weakness in both Asian and European markets after disappointing data and earnings and no substantive progress in Greece. Here are the headlines:

  • China stocks hurt by slowdown concerns (BL)
  • European shares slip back on corporate results (REU)
  • Greek leaders face crunch talks (BL)
  • Papademos seeks Greek consensus on cuts (BL)
  • Germany production plummets (YF)
  • RBA surprisingly leaves rates on hold (SMH)
  • EU watchdog to assess bank recapitalization plans (YF)
  • Weekly retail sales up 1.8% (ICSC)
  • Farmers plan biggest crops since 1984 (BL)
  • Brent hits 6-month high over $116 on Iran (REU)
  • Obama will release his budget plan next week (WSJ)
  • Republicans try again to move Keystone pipeline (REU)
  • Senate passes $63B aviation bill (REU)
  • SEC to propose new rules for money-market funds (REU)
  • 40 states sign on to foreclosure robo settlement (CNBC)
  • Toyota raises annual profit forecast (REU)
  • Coca-Cola aims double system net revenues (REU)
  • Cisco seen reporting solid second quarter (REU)
  • Oracle seeks new trial in SAP case (WSJ)
  • BP prepares for gulf oil spill lawsuits (REU)
  • Walmart to cut sugar, fat, salt in some foods (BL)
  • UBS warns of poor Q1 (REU)
  • Glencore-Xstrata meets shareholder opposition (REU)

Like so many days before it, Monday’s opening weakness was bought and we ended up flat on the day producing what is known as a Dragonfly Doji. In an uptrend, such a pattern is a sign of continued strength rather than weakness, as yesterday provided some much needed digestion of Friday’s jobs report breakout. Again, we tend more often than not to see a full price reversal of a jobs report rally but yesterday we simply just saw sideways consolidation on very light volume.

S&P 500: Daily View

With no progress technically, we are still sitting between unfilled gaps below and resistance at the 2011 July/May highs within the uptrend channel. We also remain well above the trailing moving averages as you can see above as a clear sign of continued super price stubbornness.

In the search for a significant short-term edge beyond what we already know which is to expect more consolidation if not a bigger pullback and potential gap fills from the February 1st and 3rd, the price studies reviewed this morning don’t offer much help. So, let’s keep it simple and just keep watching how the market responds to any weakness out of character from what we continue to see. A little patience here, in my view, will be very important to have as we see how the market consolidates itself and the recent gains.

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About abwehra group

The Art&Science of Trading Gold
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