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    MARKET EDGES

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Today’s intraday decline in the S&P 500 is more evidence that market participants don’t get paid to trust what Fiat Fools say and try to do. Anyone with real-time quotes can just look at romp going on in the Americas and in Europe today as proof that Germany’s decision to ban naked shorts for ten German banks and insurers, as well as naked CDS on Euro area government bonds may not provide the solution it’s intended to provide.

In a quick and by no means encompassing roundup, the following equity indices are flashing red on my screens today at the time of writing (Asian markets reflect closing prices): 

  1. S&P 500 (-1.7%)
  2. NASDAQ Composite (-1.9%)
  3. DJ Industrial Average (-1.1%)
  4. Russell 2000 (-2%)
  5. Canada’s TSX (-1.8%)
  6. Brazil Bovespa (-2.2%)
  7. Mexico INMEX (-1.1%)
  8. Fracnce CAC (-2.9%)
  9. Germany DAX (-2.8%)
  10. Spain IBEX (-2.6%)
  11. Switzerland SMI (-1.5%)
  12. Italy FTSE MIB (-3.6%)
  13. Ireland ISEQ (-3.9%)
  14. Portugal PSI 20 (-2.1%)
  15. Iceland OMX (-4.8%)
  16. Japan’s Nikkei 225 (-0.5%)
  17. Shanghai Composite (-0.3%)
  18. Heng Seng (-1.8%) 

That’s a lot of red. Apparently investors around the world don’t like when you take away their ability to hedge.

At its current price of 1102, the S&P has 0.5% of further downside risk to our immediate term TRADE line of support at 1097 and 3.4% of upside to our immediate term TRADE level of resistance at 1140. Although today’s global selloff is likely a overreaction to last night’s news out of Germany, we do believe that there are more negative fundamentals to be uncovered that that Germany is trying to protect her banks from. Perhaps more exposure to Greece and Spain that what has been revealed so far? Time will tell.

Darius Dale

Analyst

SP500 Risk Management Levels, Refreshed - S P