Dimon Rips Bernanke: Oil Rebounds
The market was down again yesterday. And that
marked the fifth straight day of declines for the indices. Volume was
average as the bears dismantled the bulls.
Moreover, the market was actually up for most of the session, but
in a late day rout the bears took the indices into the red on Tuesday.
Oil suffered another defeat at $100, and now we are left
watching $97 for support. Financials also plummeted again and that sector
is already down 2% this week. Few, if any, indices haves escaped the
carnage over the last week.
That said, I think we are about to turn higher. Most indices,
including the dreadful financials, are at or within 1% of major support
areas. And those support zones should be strong enough to provide the
indices with a 3% bounce.
But this time around there is no guarantee the indices will rally
further. The magical run that started last summer could have ended last
month, and even if it didn't it is in jeopardy right now.
Although the movement in the indices during
May did not look like a top, it is acting like one now. From relentless
moves lower to large and unpredictable gaps down, the indices have acted
very bearish over the past two weeks.
For the last month I have held the belief that the market would go higher
one more time, to 1377, and then top for a few months. But based on the
inability of the bulls to garner any strength, and the weakness from oil
despite a weakening dollar, it is possible the market has already topped
for the summer.
Also, there is really no news, other than Ben
Bernanke's prepared press meeting yesterday, which was a joke, that will
move the market higher in the near term.
In that meeting JP Morgan's Jamie Dimon (NYSE: JPM) ambushed the
Fed Chairman about how the increased scrutiny on the banks is slowing job
growth. Dimon's best line in his brief speech was, "Has anyone bothered
to study the cumulative effect of these things?" So with the lack of
significant news, any bounce we do get from here will be a purely
technical move, and thus highly subject to reversal.
We went long three stocks today to take advantage of a bounce off
of 1280 support. Two of those stocks are tied directly to oil, which I
expect to pop as well. To trade these stocks today, take a free trial of
TradeMaster here.
