Tuesday, November 06 2012
There is a lot going on in the world these days, the most important of which is tonight's election. There are many possibilities that will follow who wins the election, but that is outside of the scope of the MIPS "commentary" emails.
However, there is one point that we would like to make regarding recent market action. For the last eight days, the market has traded in what we would call "No-Man's-Land" (see graph below). In the last 8-day period (orange box), the SPY has closed between its 50-day EMA on the upside (green line) and its 100-day EMA on the downside (red line). Last Friday, the SPY opened above its 50-day EMA, but fell back into this trading range by the close. Today, however, the SPY closed decisively above its 50-day EMA.
So, the question is: "Does this breakout of the recent trading range mean there is more upside coming or is it just another so-called "bull trap", which sucks the bulls back into long positions only to turn right back to the downside. Of course, no one really knows the answer to this (not enough info), and we will just have to wait and see.
Or, does MIPS see this breakout as a new "Inflection Point" (from down-to-up) ? The answer is "not yet", so again we will just have to wait for MIPS to tell us what to do next, and when.