Without some good news out of Europe, early trading stands to produce a downside breakout in the market and in coming weeks DJIA 9,680 , S&P 500: 1012.
The Aug. - Sept. consolidation between DJIA 10,600 and 11,740 stands to be a base for a surge, or way station leading to a drop below DJIA 10,000 (S&P:1050).
This technical breakout carries some risks with the S&P 500 up more than 4.6% in three days, but institutions are afraid of missing the market ahead of big news.
The big run in stocks has discounted a lot of what the President will propose next week and needs a rest. Sell off by Friday's close likely. New Buying Risky.
European debt crisis plus the possibility of a U.S. recession are combining to produce a major buying opportunity at current levels, or a plunge below DJIA 10,000.
Stocks are cheap, there is a lot of cash on the sidelines. But a News-sparked breakout from this consolidation could be a fakeout leading to another plunge.
Expect volatility today and tomorrow as futures and options positions are squared. Economic news was so-so, European news OK. Could be a 120-point plus day.
Clarification on Europe and the US economy needed before Big money pulls trigger. 12-member supercommittee to become critical factor in confidence in government.
U.S. stocks continued their rallies in morning trading on Thursday after major central banks agreed to inject dollar liquidity to the market in an coordinated effort.
The market is close to resolving whether the consolidation pattern since early August is a base for a renewal of the bull market, or a further decline in stock prices and a very attractive buying opportunity.
The Street awaits news from the Fed and Europe, the latter not expected now until early October. Beware of a new-prompted breakout above DJIA 11,740 (S&P 1220)