Tuesday, June 26, 2007
Critical support...or is it?
I would like to point out something that I think everyone and their cousin is watching very closely. The obvious support level for the S&P is the recent June low. If this level fails all hell will break lose, right? Maybe and maybe not. Take a look at the next chart of an obvious break of major support. The commercials went long in Aug. It looks like the commercial money was more powerful than the technical breakdown. As of last week the commercials had a much stronger long signal than they did last Aug. Granted this may all change on Friday but we won't know that until Friday. I'm just not totally convinced that 1487 is the end all be all level in the market. What better way for the big money to trigger sell programs than to push the market down below this level. It would certainly allow them to accumulate stock at a lower price. Remember the smart money likes to see panic. They know it is a buying opportunity and they don't have a 2-3 day investing horizon like most traders do. So before you panic and sell everything stop and think about who's buying from you. There's always someone on the other side of your trades. Many times that someone is a very shrewd professional.