Once again, the 200-day moving average proved to be formidable resistance for the S&P500. After trading though the 1264-65 level on the now expected daily afternoon market moving FT article the index couldn’t hold its water and sold off into the close. On the positive side, the S&P500 made a higher high, higher low, and closed in the green relative to yesterday’s price action. Not a bad way to work off an overbought condition. We’re still looking for a nice Santa Claus rally that takes the S&P500 up over 1300 to close the year. Could be wrong and always with a stop.
Also take a look at commodities as reflected by the CRB chart. It kind of feels to us commodities are preparing for the coming austerity in 2012 and ready to breakdown. The ECB can print a lot of money and the eurozone money supply can still shrink as banks sell assets and contract credit. Gold can probably do well in this environment.
The key, in our mind, does money demand remain stable in core Europe if the ECB begins to monetize debt in a big way? Super Mario wants to know!
