Stock indexes quickly erased the large gain from Thursday to close sharply lower on Friday. The S&P chart looks very weak, with the recent support pivot from May 23rd taken out, the trend down, and momentum down. Volume increased on the decline. The Nasdaq is holding up much better, with the trend still up. Momentum is flipping back and forth in these markets. Friday’s action in the indexes created wide range bars, which are usually followed by a contraction in range. It will be interesting to see if there is to be follow-through, or if the lows were over-done being much of the sell-off was late Friday action, which can sometimes exaggerate a move. I really don’t have a clue or a guess. The daily and weekly S&P chart looks terrible for the bulls. Oil, of course, is being blamed. The oil bubble has not given any sign of exhaustion yet. It will end when the bears throw in the towel. Even those calling for $150 to $200 are calling this a spike and project much lower prices after the bubble pops. But they are just guessing. Nobody can forecast turning points, or how large the bubble will get. I still think when the stock market gets on its feet and makes a meaningful upmove, that there will be different groups and stocks that become the momentum favorites. The commodity play may not be the place to be down the road. But it is just a hunch.
Note: I will try to post Monday, but will not be posting for the next couple of weeks.