At the lows of the day yesterday the Dow was barely down 100 points. That move down came on the heels of Italian 10 year bonds yielding 6.7%, much higher than the 6% they were yielding just a couple of weeks ago. Yet the markets are still within striking distance of their most recent highs. Given that fact, we can’t help but wonder if the markets are starting to look past the problems in Europe, most recently in Italy.
If the markets were very concerned with the potential ramifications of yields on Italian debt soaring then we no doubt would have seen a deep red day yesterday. However, the Dow finished up over 80 points, an about face of 180 points from low to high. That reversal came without the 10 year yield on Italian bonds coming far off of its high, closing at around 6.67%. We tend to believe that it is only a matter of time before the market starts focusing more on Italy but we won’t bother saying that when they get to 7% markets should fall. No, instead we will wait for a signal from the charts.
The 1,238 low on the S&P500 is key support, while the 200 day simple moving average at 1,273 is key resistance. On the Russell 2000, key support is yesterday’s low at 730 with key resistance at last Thursday’s high of 752. A breakdown or breakout above both of these key levels will signal whether the next move for the markets is going to be up or down.
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- SH @ the bell 11/14/2011: Italy, 200 day sma to stay in the spotlight
- SH @ the bell 10/31/2011: Waiting on the crisis in Italy to unfold
- SH @ the bell 12/8/2011: Watch yields closely in relation to the markets
- Stockhaven @ the bell 8/23/2011: What is the market’s next move?
- SH @ the bell 10/21/2011: A bi-polar market place