Thursday, May 5, 2011

Sell in May and Go Away?

S&P broke important support and technicals already signal a reversal - at least in the short term. A move below the 50-Day MA will accelerate the move.

Silver is breaking painfully down towards the important area of support around 30-34 levels.
Looks like a bubble unwinding but let's see what the end of QE2 brings as inflation is still not on the radar of CBers.

As indicated in the previous Global Macro update, Copper is moving toward 408-410 area which is a 'make or break level'. Below it the 200-Day MA will hold the move, however we might see a major exodus out of commodities once a snowball effect takes place as too many players jumped on the bandwagon of the inflation theme and maybe overstayed their welcome. Let's see how Copper will trade at the 400 level.

QE2 seems to come to an end and yet again deflationary fears are rising.
Rates are dipping down towards the 3.2% Support and if broken they will target again below 3%.

Are you ready for a bounce?
It is always important to wait for a confirmation and not jump in anticipation so I'm just making this observation that the trend is already overextended and technicals are in Oversold conditions for quite some time so a reversal is highly probable. When, how much, and whether it will be a Major reversal is to be seen.