Alex Trias

Tuesday Outlook: Commodities, Global Markets

I'd chalk yesterday up to one of two different scenarios. First scenario goes like this. Several equities markets have fallen back close into the range of their 200 day simple moving averages. Similarly, the SP500 observed the key level of 923 as support. In the context of a short term bear market rally, you'd expect the 200 day averages to act as resistance. In the recent past, these areas failed to act as resistance, and thus, traders are staking out these points as support. Yesterday also could have marked a classic "shake out the week hand" - something you'd normally expect when markets are coiling up and preparing for another move higher. On the fundamental side, the economy may be better than anyone knows at this point. Why? The system is flooded with cheap

Scenario number two. Bear markets are vile hunters. They operate to lure in the unsuspecting. They bounce up, striking various promising areas of technical support or resistance, investors pile in, filled with hope, and just as price momentum peters out, volume falls off to a mere trickle, the bear pounces.