Friday, August 28, 2009

S&P Faces 'Scary' Correction

You can get carried by looking at technical stock data, but if you use it only to understand what is going on as far a supply and demand factors, and bullish/bearish sentiment indicators, they can be pretty good guides to what is going on.

Bill McLaren does a pretty good job of sticking to such details on a recent appearance on CNBC. I'm not sure the date of September 5 should be taken any more seriously than any other day, for a market break in Sept. or Oct., but the rest of his analysis on the stock market in the short term appears solid.

On a medium term basis, I doubt we will get the strong move out of the downturn that he expects, before the Bear Market reasserts itself, but let's take one move at a time.

McLaren also makes some interesting remarks about the dollar. Clearly, you have to factors working on the dollar now. International players are trying to bail, while Bernanke's new tight money policy is limiting new dollar supply. That's why McLaren is seeing the tug-of-war in the dollar chart. Could we be in for a surprise short-term dollar rally in September? Very possible. Indeed, if it does occur, it could be spike like to the upside.

The video of McLaren's interview is here.

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