Thursday, December 23, 2010

Market Has a Memory

SPX 1260 was where we topped out yesterday and in the overnight market.  It was also the point of the fear bottom in January 2008 and March 2008.  For those that remember the Martin Luther King holiday where we went limit down briefly on the ES, it was at 1255. 

Add to the past resistance at ES 1255 and the overbought overbullish tape, it favors the short side here.  Usually the dollar is weak at the end of the year but Europe is putting a wrench in that bit of seasonality.  Yet commodities keep going higher, something has to give here.  A strong dollar and strong commodities is not a long term sustainable trend.

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