Alex Trias

Friday Outlook: Commodities, Global Markets

Dull day yesterday? Yes and no, David. A couple of pretty interesting scores were scored. Bulls: 65 day simple moving average comes within a small fraction of hitting the 200 day simple moving average on the S&P500. Whoooo hooo!!! And S&P 500 convincingly demonstrates the 50 day exponential moving average as support. Yay! Looking even better on the super broad, Vanguard total world stock ETF (ticker VT). Observes it's 50 day EMA as support, closing right smack at it's 200 day EMA. Oh yeah, buddy! And check out the simple moving averages for VT. THe 50 day simple moving average has never been breached by the bears, establishing a pretty convincing area of support that is significantly above the 200 day simple moving average. Yesterday, VT charged back above it's very short term 30 day simple moving average. I mean, this is looking anything but dull if you're a bull. But by no means conclusive. Why? Because this is indeed a game, the closest analogy to which is boxing. And the big question I have is, are we seeing a classic, Mohammed Ali "rope a dope" move going on here? Maybe.
There has come a moment when Ali whispers into George's ear that he hits like a girl (not my quote). George is pounding Ali with punches - just like Ali wants. Ali wants to get George tired out so he can whoop him, but the problem is, George is a bigger, better fighter. It became obvious Ali was winning the Rumble in the Jungle when Ali actually started throwing the big punches, not just reeling back on the ropes keeping his head protected. Yesterday, Ali threw one heck of a punch. Let's see a few more like it before we call the fight:
(1) VT bursts above 200 day exponential moving average.
(2) 30 day exponential moving average slips above the 200 day exponential moving average for VT, and hey, why the S&P 500.
(3) 65 day simple moving average heads above the 200 day simple moving average for every major equity index on the Earth.
(4) 30 day simple moving average established as firm support for all major equities indexes on the planet.
(5) All major US indexes get back above the 200 day exponential moving average.

This can happen in day or so. I think the assault is on. At the moment, looks like Ali is going to win the fight.

For George the big bear to win, he's got a longer row to hoe at this point. He breaks the equities indexes in the US down below their 50 day exponential moving averages, yanks the 30 day exponential moving averages below the 50 day exponential moving averages, he's probably going to get this fight done.

In full and fair disclosure, I remain mainly in cash and bonds at this point, having sold out of most everything last week and the week before. I was calling it a 50/50 bull verses bear fight earlier this week, but the thing is, those moving averages continue to move even as the market remains relatively flat. Depending on where things go down today, Ali might just win this fight on Sunday, while the markets are closed. Wouldn't that be sneaky? You gotta love this stuff. I have a bias, which is that I would love getting back into the market again, and I wouldn't even consider a short position at this point.