Market Hangs In, But By A Thread

By: Chris Ciovacco | Tue, May 8, 2012
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As summed up by Reuters below, the situation in Greece remains fragile:

Radical Leftist Alexis Tsipras began efforts to form a Greek government on Tuesday by renouncing the terms of an international bailout and threatening to nationalize banks in a statement likely to reduce his chances of success. His uncompromising stance may lower already slim chances of forming a coalition by scaring off the former ruling parties New Democracy and socialist PASOK, while further unsettling jittery investors.

The market has reached levels where further deterioration may call for some defensive moves. As the table below shows, the CCM Market Models remain perched on the bullish/neutral line. The risk model reading of 50 means 50% of the signals side with the bulls and 50% side with the bears.

CCM Models as of May 7, 2012

The chart below is an updated version of the one covered in a May 7 video. RSI closed above 50 on Monday; it remains perilously close to a bearish cross. Note the trend in the relative performance of stocks (SPY) to bonds (IEF) after a weekly RSI close below 50 - bonds did better than stocks, which is what the falling ratio tells us.

Risk-On vs. Risk-Off - Weekly

While the chart of the S&P 500 below looks complex, the concepts are easy to follow. The two red arrows near point A show where the downward-sloping pink trendline acted as resistance in the past. The blue arrow near point B shows the same line is trying to provide support near 1,357. Point C shows the green 50-day moving average with a flat slope. If the slope turns over, it indicates a possible shift in the intermediate-term trend. If 1,357 does not hold, points D and E highlight the next levels where buyers may step in.

$SPX (S&P 500 Large Cap Index) INDX

 


 

Chris Ciovacco

Author: Chris Ciovacco

Chris Ciovacco
Ciovacco Capital Management

Chris Ciovacco

Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com.

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Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. CCM helps individual investors and businesses, large & small; achieve improved investment results via research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions.

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TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/