HCSKnight's  Instablog

My bias over the next few weeks remains toward rolling over.  However there should be a natural reaction of a few up days early next week.

The calendar: It is unlikely the Fed comments in such a way to incite another run to make a new year high.  However expect the market to mark time until after the FOMC Announcement on Wed, as long as the technical trend holds.   If some agressive shorts decide to test it, then a small stampeed could begin. 

Treasury auctions and the bond market, traditionally the bond market is the big/smart money indicator.  And recently, as the market has "stabilized", we see the equity market taking its cue from the daily bond movements.  However, what most non-professional specualtors fail to realize is the distinction between daily bond market movements and the Treasury auctions.  The latter have, and will become, more critical as concerns for the US ability to sell debt grow; weak auctions indicate lower confidence in the US economy relative to other economies and markets.  So the auctions of the middle and far end of the curve become increasingly important.

Those late longs, who missed most of the move off of the 9 Mar lows and who I believe have been responsible for the last few weeks for the post 1400 buying into the close, seem to have taken a step back and may be looking for Mr. Market to stumble toward them.   If this is true, it will set up an interesting game of chicken among the longs who were caught flat footed.....

Volume and the bulls;  the bulls, who have been fairly silent regarding the weaker volume seen during the past few weeks of rally off the 9 Mar lows, are now pointing out that volume usually increases at tops and bottoms...  Thus implying the recent low volume, e.g. today, signals that today's move was merely a pull back to the trend since 9 March.    Considering the retail attitude toward the market, I suspect the volume often seen during a distribution top, which is what the bulls are implying, will simply not be there as is expected during a normal distribution phase. 

Bear Trap or late longs adjusting their basis and exposure in attempt to show their clients they did not miss the move off the 9 March lows?

The futures were up pre-open and from that point on the market moved lower until 14:00.