Hello Everybody
If there is any doubt what candidate the markets favor, that doubt was cleared up on Monday Nov-7, when all indexes rallied strong, with the often watched Dow Jones Index gaining 371 points. However volume was lackluster and this was indicative that institutional investors were not behind the Nov-7 rally, and instead it was “dumb money” versus “smart money” at work today. Lets look at some SP 500 charts:
Apparent is that the volume was lower than the prior trading day volume (that day would be Nov-4), also apparent is the volume was noticeably less than the heavier “sell off” days of Oct-27, 28, Nov-1, 2. Such sell-offs basically need same, or greater, volume, combined with a gain in the index, to “overcome” those prior down days. None of that occurred today. As evidenced by the below chart, the SP 500 is in a downward “channel“, based on deteriorating price action causing the trend to slope downward, this channel is determined by taking recent highs and recent lows and establishing trendlines:
The SP 500 is basically operating with a sloping overhead resistance line of 2150, and a sloping support line of 2070, it is bouncing within the confines of this channel like a pinball. A break-thru of these lines, combined with high volume, is indicative of a probable continued move in that direction.
In summary: A rally such as today is always welcome. However further inspection reveals not all is what the cover of the book would lead you to believe.
I remain 100% G-Fund until further notice. Thanks for reading and talk to you soon.
-Bill Pritchard
