Markets Squeezed and Waiting for a Breakout

Well, this blog ground to a grinding halt pretty quickly! Actually, 2009 was a deeply V-shaped year for amny reasons, but you don't care about that, so let's get down to the numbers again.

The stockmarkets in Europe and the US are currently getting squeezed into a channel flanked by the 50-day moving average (50DMA) as a resistance and the 200-day moving average (200DMA) as the support. As usual, I'll look at the S&P 500 and you can figure it all out for other markets.

The SP500 currently has the 50DMA at about 1,100 and the 200DMA at about 1,020. It hasn't yet tested the 200DMA but I expect it will sometime this month. In spite of the flag-waving and cheering from the corporate press this market looks like it's suffering from flu. The market pumps, especially of the Dow, are just to rip off the unwary day trader. For this month, if you haven't already gone short when it broke the 50DMA then it's too late and wait for it to go through either of the two DMAs as they converge on each other. [see SP500 chart]

As I write this the Dow is getting another dose of vertigo at 10,000 and with sovereign debt hanging over the whole world I don't think there's much enthusiasm here.