Your MUST-READ Morning Stock Futures Cheat Sheet – 8-5.11 – “Post Mortem”
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The Precise Take – Post Mortem
Big Picture Analysis: The three central bank interventions (SNB, BOJ and ECB) prior to yesterday’s open were not enough to stem the waves of capitulation selling that overcame the markets. Or, perhaps, their actions were seen as pusillanimous half measures. Regardless, serious damage was done to the market and, while we might expect a short term flashy rally to emerge in the coming days, extreme caution must be exercised in this low liquidity environment. One thing that contradicts our present bearishness is the US money supply, where, as of yesterday’s post-close release, the Fed reported M2 is growing at 9.0% over the past 13 weeks. Long and intermediate term bear markets tend to emerge after a period of money supply contraction. Accordingly, there might be one more intermediate term rally that emerges in the coming months, but that remains to be seen. For now, focus will turn to the central banks this weekend and, in particular, the Fed, which meets at its FOMC meeting next Tuesday.
Trading Today: No projected range for today, though we have marked the major support and resistance areas in the chart below.
Click above images for larger charts.