Yesterday's violent late day reversal which took the dow from up 350 to up 98 in a matter of an hour only to close up 148 pretty much tells us that this was another one of these short covering rallies that began last Friday. I kept waiting for that one last climactic sell off on Monday and it never came. And as always with these things, MLPS tend to lag. The index closed up 5 points and we may say a little catch up this morning where the index lags if the market opens higher.
Notice on the Dow chart in what everyone is calling a range bound market with 10,700 at the bottom and 11,500 at the top, the market has turned twice at the 34 day moving average and we hit it again yesterday and sold off right from there. If we see followthrough today we could say that another short term top has been reached and we are headed back down to at least the bottom of the range.
I continue to argue that the bottom of that range is going to fail and we need to make a trip below 10,000. What the reason for the break will be? I think its the inevitiablity that Greece fails and the contagion spreads to the other Euroland countries. Certainly we have history on the side of this trade that Europe will continue to kick the can down the road but now the road is ending at the side of the cliff and the next kick will probably send it over the edge.
This morning in mlp land we have no news to speak of and no upgrades or downgrades. Stock futures are a little higher ahead of the open as the market seems to continue to trade with the Euro almost tick for tick. Crude oil is a little lower, euro markets are a little higher and gold is a little lower. The VIX is sitting just under 38 and the 10 year is at 1.98%. As i've said before, with those 2 metrics its hard to envision any rally lasting more than a few days. Shorting rallies has been a money maker lately and will probably remain so until proven otherwise.