Coolhand's Market Analysis

After two days of hard selling the market bounced. But does it mean the selling is over for the short term?

The European crises revolving around Greece was tempered today, as the European Central Bank will be weighing in on the Greek referendum before they (ECB) issue their next policy statement. That statement gets released tomorrow. That could be a market mover

Our own Central Bank (the FOMC) released a scheduled policy statement this afternoon. Not much changed, and there was no QE3 either. Target interest rates remained at 0.00% to 0.25%. Of course they continued to indicate that they were ready to react to any further economic shock should it be necessary. The Fed also revised their growth forecast. For this FY11, the Fed is expecting growth to come in between 1.6% to 1.7%, which is significantly lower than their original forecast of 2.7% to 2.9%. In FY12, they are looking for growth of 2.5% to 2.9%. That too is down well below original estimates, which were pegged at 3.3% to 3.7%. The Fed also expects unemployment levels to drop next year to between 8.5% and 8.7%. Their forecast for this year was lower than the actual numbers though.



There was also a bit of market data released today. The ADP Employment Change for October indicated that private payrolls rose by 110,000. This was better than the 100,000 that had been forecast.

Here's today's charts:



NAMO and NYMO moved higher on today's buying pressure, but remain in sell conditions.



NAHL and NYHL also remain on sells.



TRIN spiked lower and suggests a moderately overbought market, while TRINQ also moved lower, but is largely neutral with a slightly bearish bias. This market could go either way on these signals. I'm thinking chop more than anything else.



BPCOMPQ ebbed back up a bit, but remains on a sell. This signal is holding its own so far, in spite of the sell signal that was triggered yesterday. If this market moves back up from here it could flip back to a buy easily, as could the other signals that are flashing sells.

So the Seven Sentinels are mixed, but officially remain in a buy condition. Keep in mind that they issued an unconfirmed sell yesterday, and that could be an early warning of lower prices to come in at least the short term, but that's not a given.

I'm largely neutral at the moment as I think the market will wait until the jobs report comes out on Friday before it makes any big moves, although we do have the ECB policy statement being released tomorrow, so I suppose anything can happen. I am not convinced the latest move lower is finished, but sentiment did shift from bullish to bearish very quickly (after those two down days) in some pockets of the market. That's a positive for the market, but if sentiment is shifting that fast then whipsaws are more likely.