Home > Uncategorized > General Update: 2010/02/04: Political ‘Detente’ Aid for Equities Temporary into Renewed Weakening of Economics

General Update: 2010/02/04: Political ‘Detente’ Aid for Equities Temporary into Renewed Weakening of Economics

▪  A MAJOR REVIEW OF WHY EQUITIES CAN FALL A LOT FURTHER RIGHT AWAY, possibly even with a ‘good’ US Employment number tomorrow. We encourage anyone who has enjoyed our perspectives to look into this major reinforcement for our negative intermediate term trend view on equities that also informs our view on stronger fixed income and US dollar. 

▪  Equities weakness at the end of last week (especially the March S&P 500 future Close below 1,080-75) in the wake of strong economic news highlighted the degree to which US political disarray was a major sign ‘politico-‘ was trumping ‘economic’ in the near term.  However, Monday’s gap higher back above that key March S&P 500 range was a sign the overt political discord that made the US seem completely paralyzed at a most inopportune time had abated to some degree. And ‘degree’ is the operative term.  However, nobody should mistake ‘detente’ for a bipartisan Love-In breaking out anytime soon. Republicans have absolutely zero interest or incentive to become Barack Obama’s friend, and help him pass his aggressive programs into law prior to the election. 

 ▪  What is most striking about the technical trend activity in the equities is the failure of the major US indices at or around key levels yesterday. That led us to question whether any further upside reaction after the recent drop is indeed in the cards, and heightens the critical nature of the markets’ extended response to tomorrow’s US Employment report. More important right now are key near-term resistances noted (in last Thursday’s Brief Update), such as DJIA failed support in the 10,300-10,230 range, which holds the key to whether it can indeed revisit the 10,500-10,600 area, March S&P 500 future just missing previously important 1,102-08 on its recovery back above 1,080-75, and weak sister March NASDAQ 100 future squeezing back above its critical 1,782 yesterday only to drop right back below it this morning.

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