Market Forfeits Intraday Gains, Limps Into Close During Bernanke Speech

Another brutal day for the equity markets, not so much in terms of the amount lost at the close, which was only 8 cents on the SPY, but for the failure to hold modest gains which close to one percent at the highs of the day. The market traded on very light volume up until the last 15 minutes of trading which was when Bernanke began his testimony. It is difficult to speculate the market’s sentiment based on what was said during the speech. Bernanke sounded fairly neutral to hawkish, though he attempted to use some scapegoats such as the earthquake in Japan having a larger effect on manufacturing and imports. Of course, that’s quite a double standard – according to most policy makers it’s not possible for there to be reduced spending from rising commodity prices as that is a sign of growth, but the high costs from the weakened manufacturing output in Japan can in fact cause a reduction in GDP growth in the US.

In any case, it’s useless trying to speculate how the market will react, the only way to play this is to allow the market to tell us where it is headed. We are still in a confirmed downtrend and today’s weak showing in the last 15 minutes only reinforces my belief that we’re headed for 127 and possibly even lower on the SPY. Though we had a weak showing today, I still think that we’ll get a bounce before the week is over or perhaps by some time next week before options expiration. Either way, resistance will be at the 130 pivot which is close to where the former support trendline is for the negative price channel that the market trading in going back to the beginning of May. I am still long DXD but I am waiting for a pullback to add to that and may play the long side of the market for a few days in attempt to profit off of a bearish consolidation.

About Aaron Basile
Day Trading and Swing Trading Ideas, Certified Personal Trainer, Power Bodybuilding, Avid Sports Fan (NBA, NFL)

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