Shares of the S & P 500 SPDR ETF (NYSE: SPY) did not recover
on Monday.
Chart Courtesy of StockCharts.com
With traders trying to get a last bit of summer vacation in,
the dog days of August are here, which means low volume, trendless
trading. The problem is that if something happens, the moves
can be exagerated due to thin market conditions.
Monday's action gave us little to change our opinion with. From a chartist's
point of view, the S & P 500 is in bear market territory, by one definition,
given that the index is below its 20-day moving average.
SPX broke below its 20 and 50-day moving average recently, and continued taking
out key support levels all of last week, as investors stepped aside. That remained
in place on Monday, as the market went nowhere.
The other major indexes were again mixed as the Nasdaq Composite, which broke
below its 200-day moving average last week, managed a minute bounce on Monday.
But there was nothing spectacular about the action on Monday. And that maybe
the way things stay for a while as traders continue to scratch their heads about
the economy, and the latest salvoes from Washington.
There is a new take on the White House now, being put forth by pundits like Maureen
Dowd of The New York Times and White House press secretary Robert Gibbs. The
concept is simple, the "professional left" is handcuffing the president. There
is, according to this line of thought, a difference between "liberal" and "radical" and
it is that tug of war which is leading the president astray from his normal "centrist" leanings.
We're not sure what to make of that, except that the market has to factor in
those kinds of concepts as well as the latest economic data, and dealing with
the rumors about who had to meet a margin call on a weird credit default swap
that went wrong.
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