Overnight Dive

Interesting overnight session thus far. Traders saying that conditions are thin which could explain the dive downward below the support around 1121 and the 65 period level at 1120. The low of the trade happens to be the bottom of this trading range around 1114. A break through should lead to a test of the 1106 area and then things get serious for the uptrend - reason being is simple; seasonally this is supposed to be the strong week and if the markets actually finishes lower, that would argue for overall market weakness. With the break overnight I am now short so we'll see how this plays out.

As for the other major news event of the day, ie the Fed, just a quick word. Money supply figures have been slowing on the growth side and outright negative on the loan and revolving credit side so the Fed's move to reinvest dividend and maturities basically keeps the money supply constant - accelerations of money supply are an increase in easy conditions...a decrease in money supply is a tightening of conditions...and doing nothing and keeping things steady is a neutral stance. So while the Fed claims things are weakening, they are in fact neutral while things are weakening. I don't see a double dip as a viable threat but the economic indicators are clearly slowing.

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