War & Banks

With a title like “War & Banks” I could really write up quite an interesting piece on wars, who and how they are funded, who financially benefits, and more.  But that is for another time. This Monday we are witnessing a “war rally” as the Dow trades +250.00 above Friday’s close. To be a little more accurate, perhaps I should have said that the market is breathing a sigh of relief that the shelling of Syria over the weekend did not escalate out of control as some had feared.

It is being reported with glee on the financial media this afternoon that the Dow is “finally” trading back above its 50-day moving average (MA).  This is true; but will it close above that level? What’s more, the pundits on TV are not reporting that said MA is sloping down, which is still bearish.

In the chart below we can see that the Dow is being supported by the 200-day MA and also finding some resistance at the 50-day, as well as a gap level that was closed Monday afternoon.

JP Morgan released good earnings Friday morning before the bell, so it was surprising to most that it did not lead to a much stronger day.  So with the threat of war escalations out of the way, it is rallying today – right? No. Although it is up, it is hardly “rallying.” Going forward, we will keep an eye on this development for further weakness to test the $103.00.