Ad Hoc Commentary – Dow respected the 50dma and 200dma

As bearishness takes over the mainstream, we notice that Dow respected the 50dma and 200dma two nights ago. That would likely signal the ability of the market to make a comeback in Aug 2012.

The real economy is looking ugly and no matter how much lipstick we put on them, they still do not look pretty. But trading equities is trading bond to equity reallocation, and currency debasement. On debasement, the biggest events to watch is Jul31-Aug1 FOMC and Aug 31 Jackson Hole.

We maintain that Uncle Ben will likely not do QE3 this year. Chances are he will stay fuzzy on QE3 on Aug 1, and dash those hopes on Aug 31.  But markets usually move in advance, so it could should sell off as soon as Aug 24.

All is not lost for the equity bulls. The bear’s time to shine is only after Aug24.

Good luck in the markets.