Technically, not looking so hot.
*H&S pattern
*Divergence pattern
*First test of 50MA & 200MA
Fundamentally, the economy remains poor. The policies that are in place are not the right ones, thus there can be no sustainable recovery. We will [based on the economy] chop in a range until the policies currently in place are abandoned, or, they cause a further serious breakdown in the economy.
Could we retest the March lows?
Quite possibly, I see no reason why not, save for the credit expansion currently being engineered by the Federal Reserve. If rumours circulate that the credit expansion will not continue, then I think the lows would be retested.
The bounce from the March lows was engendered largely [entirely] on a massive credit expansion via The Federal Reserve. Insiders have been selling stock at unprecedented rates recently into the rally. This new supply will not be absorbed unless new money is created to absorb this supply.
Additionally we have new rumours of the reinstatement of the short-selling ban. This utterly failed last time, which even in the absense of any other reasons should be enough to nix the idea. That short-selling actually limits declines by providing a buying source [shorts buying to close trades] shows the total lack of any understanding from those in charge.
So if the rumour is true, or even if it’s not, the markets again are faced with increasing uncertainity, which, almost invariably leads to selling.
