SPX May be Turniing at the 50% Retracement Level

By: Anthony_Cherniawski

I am remiss in not bringing up the Orthodox Broadening Top trendline as a potential target for this retracement. It appears that SPX may have just turned at 2042.74 while the exact location of the trendline is at 2041.61. The 50% retracement point is 2041.57. While I did mention the 50% level this morning, I had not recently calculated the position of the trendline. Now that I have located it properly in the chart, you can see how many times (at least 5) it has provided support in the past month. Today it finally appears to act as resistance.

The final hour of the trading day approaches and with it comes the institutional traders. One of those institutions, BofAML warns that the “Fragility” indicator is the highest since 2008.

Goldman Sachs warns that all six of its Global Risk Indices are worsening. Neither of these Dealer-banks will be buying for their own accounts this afternoon. Is Citadel trying to spoof the market higher?

MUT is attempting to claw back its losses since last Thursday. With many junk bond funds throwing up the gates to those who wish to exit, we are seeing this spread across the hedge fund and mutual fund community.

ZeroHedge reports, “In the aftermath of the stunning liquidation and gating of first Third Avenue's junk bond mutual fund, and shortly thereafter several other fixed income hedge funds, investors have been following with great interest capital (out)flows from the fixed income space. However, while the junk bond space is certainly ripe for fireworks, even more dramatic events are taking place in the far more familiar equity space, where with redemption submission deadlines looming or having just passed, LPs and all other hedge fund investors have decided that after seven years of underperforming the market, it is time to get out, and do so with a bang.”

I wonder where these funds get their liquidity to rally like this.

Regards,

Tony

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