Not Really a Bounce
15th June 2008
The bulls would call Friday’s action a bounce, but the bears would point out that while the market was up, the volume was down. While the Nasdaq managed to claw its way back above its 50 day MA, there there is still plenty of overhead resistance.
It was a tough week for bonds thanks to higher inflation expectations, thanks in part to a 0.6% rise in the CPI index. Since most of that was due to higher food and energy prices the bulls think that means we do not really need to be concerned with inflation. If the consumer only has money to buy food and gas, that can not be good for the economy. Last I knew if the economy was having a tough time, that can not be good for the stock market. Friday’s move might just give you a better opportunity for some bearish options trades.
JD