5 Things To Ponder: Through The Looking Glass

‘If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?”Lewis Carroll, Alice’s Adventures in Wonderland
Is this the beginning of a bigger correction, or just a respite before the next advance? This is the first correction, since the beginning of the Federal Reserve’s latest round of quantitative easing, where the market has broken decisively through its shorter term moving average as shown below.

As I discussed yesterday, the Federal Reserve is unlikely to raise rates soon. With spreading global weakness due to the recession in Japan, the Eurozone and slowdown in China and U. K the global wave of ‘deflationary’ pressures will likely weigh on domestic growth in coming quarters. Such would prove a disappointment to market bulls.
Wednesday’s performance (S&P 33 pts) raised the question as to whether it was the start of a return to recent highs, or just another counter-trend rally within a still-developing downtrend? Thursday’s collapse through critical moving average support at 1945 puts the current bullish trend in danger.

This post was published at StreetTalkLive on 10 October 2014.