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August 16, 2007 (5:30 PM)
Dow Holds The Line
When the Dow plunged below its 200-DMA today all was seemingly lost…Until the average skyrocketed back above its 200-DMA.
There was some hedge fund positions being liquidated in a variety of markets today, there was some wild bouts of short covering, and there was enough bailout/blowup talk to keep speculators on the edge of their seats. But what today’s market lacked was a sense of conclusion. For example, are stocks now in bounce mode or simply awaiting the next blowup? Is the credit crunch fading away or about to intensify? Has the commodities bull finally been busted or not?
I happen to think that the commodities bull is in pause/crash mode, that stocks are in a bear market (rendering any bounce brief), and that we have not seen the worst of the credit/liquidity crunch. The only problem is that these conclusions are based upon my speculation that the U.S. economy is about to meet its first consumer led recession in 16-years (not exactly a popular call).
For what its worth, today the Dow managed to close above its 200-dma, extending its stretch to 269 trading sessions without a retest of this mark on a closing basis. This is the longest stretch since the bull charge began in 2003. As for all of the supposedly wild swings in the Dow today, it is interesting to note that the average actually posted only a 365-point intraday trading range - or 11 points below the average daily high/low posted over the last 16-trading sessions.
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