by JDH on February 4, 2012

You will be pleased to know that today’s commentary will be shorter than usual. Mercifully short. In fact, it will be only one word long:




Long time readers will know that I can’t keep my mouth shut, so allow me to elaborate on my one word commentary. In fact, since a picture is worth a thousand words, here are a thousand more words, pictorially:

As you can see, the S&P 500 traded essentially between 1,310 and 1,325 for 11 straight trading days. That’s a very tight range. On Friday it broke out of that compressed range, and closed up 1.5% at 1,345. So now the inevitable question:

Was that 11 day period like a spring, compressing the market, and Friday’s action was the uncoiling of the spring to the upside? Can we now expect a further run to new highs? Possible, but the Relative Strength Index is now at a very high 73.59, so common sense would tell you that a pull back is inevitable. But how can you have a pull back after a one day spring?

I have no idea, so I will make no further comment.

I will leave it to you to decide.

By the way, here’s the gold chart for the same period:

No sign of compression here; gold crated on Friday while the stock market increased, but even the short term up trend is still in place, so no worries here.

As brevity is the essence of wit, I will sign off and see you next week.

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PaidInGold February 4, 2012 at 9:51 am