Seeking Alpha

Alex Trias'  Instablog

Alex Trias
Send Message
Individual Investor
  • Now This Won't Hurt a Bit 0 comments
    May 21, 2009 4:48 PM

    All things considered, Thursday May 21 wasn't all that bad.  The notion of the United Kingdom being downgraded certainly raises the prospect of a United States debt downgrade as well, which, combined with a massive new supply of Treasuries coming on the market conspired to send stocks and bonds alike reeling.  A downgrade of the United States creditworthiness, the threat of that even, is tantamount to financial Armageddon. And with the equities market perched high at the tippy top range of a bear market rally, stocks are vulnerable to say the least. And right at technical resistance, as well.

    Recipe for a massive down day, and yet, we shed only a percent or so. What gives? My thought: Armageddon is already priced in. If so, then the wall of worry is something investors are cognizant of, fully. And if we are climbing a wall of worry, then this is a bull market. The ability of the markets to shake off this news is encouraging. Also encouraging is the fact that many etfs tracking internat... indexes remain poised above their 200 day exponential moving averages (the "EMA"). In a bear market rally, the 200 day EMA is typically resistance, but today, it has acted as support for one very broad ETF - the Vanguard Total World Stock Index ETF (or VT).  It is not consistent with a bear market rally for a 200 day EMA to act as support - particularly in the face of truly horific news and the prospects for much worse to come. And some the really high beta, risky ETFs are still quite high above their 200 day moving averages - I am considering IShares MSCI Emerging Markets Index (NYSEARCA:EEM), for instance.

    It remains too soon to say whether a new bull market has formed up or whether we are destined to retest some of the lower points this year. Today, however, was win in disguise for those arguing the bull case. That said, the bears are chipping away at the bull case. The question I ask is "was that their best shot?"  


Back To Alex Trias' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.