The Simple Acco...'s  Instablog

Quick midweek update:

Wednesday's trading action was quite interesting. We saw what looked like a short term reversal in U.S. stocks. as the day began down heavily and ended on a positive note. This is a departure from the trading pattern over the recent correction. It's all the more interesting as the dollar index broke over 82 and, in the short term, is in uncharted territory - we haven't seen 82 in nearly two years.

Gold also put in what could be seen as a reversal while the dollar surged, but crude oil fell again and looks set to break below $90.

Treasury yields are still bumping along near the bottom, and corporate bonds seem to have stabilized.

All of the major U.S. equity indexes, except the NYSE composite, have successfully defended their 200 day moving averages at this point. Of particular note, the small cap Russell 2000, which did break the 200 day briefly last week, has held the line this week.

It looks like the bounce I was anticipating may be getting under way, but a healthy skepticism is still warranted. My suspicion is that the correction hasn't played out just yet. We could get to 1,340 - 1,350 on the SPX and then see another decline back toward the 200 day.

Good luck, everyone, and be careful out there.