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MV Weather Report: Swirling Winds Surround S&P


Rain or shine, we review the day's biggest stock stories.

What an incredible week it was for the bears. In less than three days they were able to make the S&P 500 pullback nearly 40 points.

Today the S&P 500 shed -0.61% closing at 1044 just off the day's low of 1041.

Research in Motion
(RIMM) had an obvious drag on the tape after the Blackberry boss reported a weak quarter and gave poor guidance. New home sales came in less than expected as well. These two data points crippled the market, reporting its third losing day in a row.

That being said, who didn't see a pullback coming? Oscillators were at extreme over bought levels, the S&P has rallied 60% in a straight line and euphoric greed had made its way back to the market.

The biggest question, as we head into the weekend, is what happens next? Is the market in a bullish or bearish position here?

On today's Buzz and Banter, Jeff Cooper answered that question for a curious subscriber.

"In fact it is ostensibly a pretty bullish setup: it is a 1-2-3 Pullback to the rising 20 dma which also coincides with a 90 degree pullback from the swing high.

"Except for one thing: time is more important than price. There are other cyclical factors at work that and other patterns at work such as the Pinocchio into the gap from a year ago with the DJIA at 50% off the March low and kissing its 20 month m.a. for the first time since May 2008 ( a good high) that suggests that this time is different--that the thesis may not be to buy this pullback but to sell all rallies until the market can prove otherwise. In my opinion.

"Moreover the action in gold and oil despite news on the Iranian front backstops the premise I believe."

I thought Professor Cooper did an excellent job of laying out both sides of tape.

The bears will tell you about the geopolitical concerns (Iran), a market that still is overbought, and the coming rally of the dollar. The bulls will be quick to point out that the credit markets are still strong and that this is just a bounce of DXY (dollar index) support at 76.

Basically, it's all on the dollar. My question is, with the bear camp in the wrong for so long, when will they declare victory?

That's all for this week. Check out the trading radar for a preview of next week and Buzz of the Street for a compilation of this week's best on the Buzz and Banter.

Have a great weekend!

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No positions in stocks mentioned.

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