Suckers Rally (by Zacks) >>
Enviado: 17/10/2011 14:30At the Tipping Point
On the back of a strong Retail Sales report Friday, stocks made it to the top end of the range that has been in place since early August (1120 to 1220). In fact, Friday's close is just a notch above at 1224. This has created a bit of suspense as to this week's action.
Do we finally break above or does this rally fail once again???
My guess is that we are being set up for a classic "Suckers Rally". Meaning that the market will break above this range shortly. That will create momentum up to the 200 day moving average at around 1276. And just as everyone is getting caught up with bullish fever, the smart money crowd will pull the rug out and we head lower.
Why would we head lower from there? We need 2 things firmly in place to break above the 200 day average. First, we need economic data to improve beyond current levels. That hurdle is the easier one to surmount. However, the second ingredient is to have the European situation "clearly contained". That will take a lot more time and a lot more proof to satisfy most investors. Without these things solidified I find it NEARLY impossible to get above the 200 day moving average.
On the back of a strong Retail Sales report Friday, stocks made it to the top end of the range that has been in place since early August (1120 to 1220). In fact, Friday's close is just a notch above at 1224. This has created a bit of suspense as to this week's action.
Do we finally break above or does this rally fail once again???
My guess is that we are being set up for a classic "Suckers Rally". Meaning that the market will break above this range shortly. That will create momentum up to the 200 day moving average at around 1276. And just as everyone is getting caught up with bullish fever, the smart money crowd will pull the rug out and we head lower.
Why would we head lower from there? We need 2 things firmly in place to break above the 200 day average. First, we need economic data to improve beyond current levels. That hurdle is the easier one to surmount. However, the second ingredient is to have the European situation "clearly contained". That will take a lot more time and a lot more proof to satisfy most investors. Without these things solidified I find it NEARLY impossible to get above the 200 day moving average.