Market Summary

The rally continued up to Friday when the SEC brought charges against Goldman Sachs (GS) for fraud for failure to disclose Paulson & Company short positions in mortgage backed securities. John Paulson profited by 1 billion dollars and is now willing to testify against GS. But wait, is there more to the story? Could the GS charge of fraud be political, so as to make the banking lobby back off the financial reforms being pushed by the White House and Congress? It is unlikely that any high level bankers will go to jail but this news was enough to tip the market. Monday will be a telling day as to the strength of the sell off.

We had Reversal Week to the downside for the SPY where we went above last weeks high and closed below last weeks close. This is just the beginning of a move to the downside. Will the market break down? When will the market turn? No one knows but it is important to have lines in the sand which tell you when to accelerate and decelerate your portfolio. The lines are support and resistance lines and technical indicators.

The image below show that the short term sentiment has turn bearish as noted by the pink background on the 240 Min chart. Intermediate and Long term sentiment remains bullish. Click on image to enlarge.

For the YTD period the small cap index is up the most up 11.64% followed by the Nasdaq up 7.49% and the SPY up 5.32%. For the week the small cap index was up the most up 1.66% while the FXI, EEM, and GLD were all down with the FXI down the most off -5.11%. Click on table to enlarge.