November 1, 2011
Uncategorized
By Geoff Bysshe
200-Day moving averages are where the big corrections end and major trends are defined. Over the years I've come to respect the 200 like unwelcome advice from a grandfather - you don't always want to believe it, it often takes time to sink in, but unfortunately its usually prudent to follow it.
The SPY, DIA, IWM, QQQ, and KRE are all within 5% of their 200. If you put a 3% band around the 200 and consider that the undecided zone you may find it like wise advise - worth waiting for, and accurate.
All this is to say that the inside day reversal after all the indexed finally got into gear right around the 200 after a historic sprint to these level is all adding up to a very big yellow caution flag for the bulls. I don't think we need to scream top, but we can certainly look for shorts and be careful with longs. It's a two way market now and that is reflected in the focus list.
The pivots are all negatively stacked and the Thursday low and Friday low are big resistance areas to watch for. On the support side, note that the 10 day MA has been very good support on a closing basis on all 4 market watch so no need to get overly bearish before at least that level is broken.