The Highs for the Year are Possibly In


Author Larry Berman

Posted: 11 Apr 2012 re-posted from etfcm

Back to back 90% downside days are rare and likely marks a few days of capitulation selling for late to the party longs. But the bigger message is that the highs for the year are possibly in and the next few quarters will be about consolidating the gains since last year’s October lows.

The key support trendline we have been following has broken, the 50-day average has broken, and VIX has finally turned up through its own 50-day average, although some of that is reversing this morning as the ECB looks to intervene in the debt markets to prop up Spanish debt.

Look for earnings to drive a bit of a bounce too in the next week or so, but it is evident that a distribution top is developing. The next key support is in the 1340 area with resistance very likely to build above 1390, though we cannot rule out an earnings inspired higher high as the bulls have their last gasp at irrational exuberance or benign neglect about the reality of the global debt problems.

 

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