- Market Commentary -

June 30, 2010 (FinancialWire) (By Dr. Joe Duarte) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — The S&P 500 SPDR ETF (NYSE: SPY) made a new intraday low yesterday, as the stock market turned lower in a more aggressive fashion, again crushing key technical guideposts as the global economy’s fundamentals seem to wobble. On June 9th, 2010, in this space, we penned a piece titled “Smells Like A Bear Market?” (http://www.financialwire.net/2010/06/09/duarte-commentary/). Since then, much has happened.

For one thing, the market tried to make this analyst look foolish by forming a textbook “W” bottom in the S&P 500 index, and sucking in a whole lot of hopeful investors.  We looked upon the rally, as a potential positive reversal, as long as the S & P 500 could cross above its 200-day moving average convincingly.

On June 16th, in this space, (http://www.financialwire.net/2010/06/16/duarte-commentary-2/) we noted: “The mainstream media is gushing about the 200 day moving average, but the real story should be the completion of the “W” bottom on the S&P 500.   For a couple of weeks, we have noted that the S&P 500 was rounding out a “W” bottom.  It looks as if that “W” was completed on June 15. That means the burden of proof has shifted toward the bears. If they can overwhelm the buyers, the bears will likely win a significant victory.  At this point, we rate the odds of such a victory as no better than 50-50.”

Since then, the “W” bottom has fallen apart, and the market looks headed for new lows, as traders seem focused on the potential for more economic problems in Europe, and those problems spreading throughout the world. The issue was complicated further by two well know economists. One is the bearish Nouriel Rubini, whose nearly permanent call for a double dip recession got some notice after the G-20 agreed on austerity measures going forward. The other is Nobel Prize winning economist and New York Times columnist Paul Krugman who wrote that we may be in the early stages of a Depression, earlier this week.

What’s happened is that important guys who’ve gotten it right before, are getting some airplay, just at the time when the G-20 may be making a mistake by choosing an “all fits one” solution to the current global economic problems, while the stock market was in the midst of a technical failure, as the S & P ran into heavy selling at the 200-day moving average, much as we suggested that it could given the mainstream media’s ability to ruin a good indicator.

So, the bottom line, is that just as Hurricane Alex looks headed for the Gulf oil spill, so has a perfect storm seemed to have hit the stock market, as the technicals and the fundamentals seem to have aligned at the same time.

There is only one thing to do: brace yourselves for impact.

(Go to http://www.financialwire.net/?s=drtjby to see more commentaries by Dr. Joe Duarte.)

(Go to http://www.financialwire.net/2010/04/22/about-duarte/ for more about Dr. Duarte.)

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