Stock Bull Still Intact in Follow-the-Leader Marketplace
October 6, 2011 
2 Comments
Stock Bull Still Intact in Follow-the-Leader Marketplace
October 5, 2011 7:07 PM GMT For original story go to:
http://www.ibtimes.com/articles/225704/20111005/jay-norris-s-p-500-euraud-live-market-exercise.htm
Despite having spent a tense 12 hours looking over the edge of the cliff Monday and Tuesday, the S&P 500 managed to close above the August low yesterday and keep its 2-1/2 year pattern bullish – see Figure 1. While it’s still only mid-week, and volatility remains inflated a move back above Monday’s high of 1133.50, according to IBTRADE Chief Market Strategist Jay Norris, “would go a long way in alleviating the bear pressure and put speculators who shorted it over the last 3 days underwater”.
Since the launch of QE I in the late winter of 2009 not only have financial markets such as the Euro and Aussie shown a 80 plus percent correlation to the S&P 500, so have commodities such as crude oil and gold. “The S&P 500 is the alpha market right now”, according to Norris, “and that isn’t about to change just yet”.
The S&P 500 is in fact an influential index and widely seen as a proxy for the global economy. Given the follow the leader nature of traders and markets a recovery now for this influential index would have a far reaching affect across the financial and commodities markets. There are always two sides to a market though, so a failure of the current day old rally could shift the direction of so many markets lower again. As long as the S&P 500 futures stays above 1075, according to Norris, “the bears can’t get traction”.
Jay Norris hosts Live Market Exercise where he spends 12 hours per week pointing out trade set-ups and signals in live markets. He is the author of Mastering Trade Selection & Management, McGraw-Hill, 2011, and Mastering the Currency Market, McGraw-Hill, 2009.
Trading futures or Forex is a risky endeavor and not suitable for all investors!
Hi Jay,
on Oct. 5, like every day I have received an interesting mail from Black Swan Capital’s J.R. Crooks (Currency Currents). The day before the Dow rallied 4% during the last 45 minutes of trading. He wrote:
“Financial Times in cahoots with the PPT? The S&P 500’s fate depends upon it … sort of!
Well, that was awfully convenient. Did you notice the Dow rally 4% in the last 45 minutes of trading yesterday?
I sure did. I had a stop-in order trade idea I presented to my Commodities Essential subscribers that was barely filled just before risk appetite shot up like a rocket. As I was watching the afterhours trading it appeared that I’d be facing a major hit when the markets opened this morning.
Before I discovered the “reason” for the sharp reversal, I could do nothing but curse the PPT (Plunge Protection Team). The PPT has a certain way about them (assuming “them” really does exist) – they have a way of ruining traders for the sake of saving investors, I guess you could say.”
Do you agree with that?
Regards,
Torsten Kroeger
p.s. it was last March when I attended your excellent online seminar about >Directional Lines. I always use use them now for my trading.
Hello Torsten,
Yes I remember you. Good to hear from you Sir!
I don’t think there should be any doubt that a countries central bankers will act to protect thier financial markets. It is widely believed by American traders that the concept was concieved and implemented following the crash of ’87 by Don Regan — Reagan adminiistration official and former head of Merrill Lynch.
There is an old saying here in Chicago: “Don’t fight city hall”. On the NYSE a similiar sayiing is “Don’t fight the Fed”
I think that if one sees a black swan they shold take a picture of it, cuz it is fleeting.