A very noteworthy 24hr period this..
Asia overnight fine.. small move south on average but nothing to write home about.. steady market reflecting the general mood at present if not the news flow.. lol..
Ben came out and poured some fuel on the fire of the longs.. The Bernake put is under the market. Any decent decline and Ben told us clearly he will print to keep asset prices high.. As soon as he said these magic words the market took off to the upside.. all asset markets across the world. The USD was uncerimoniously dumped immediately. Even the GBP jumped vs the USD, this is how bad the USD performed yesterday.
End of day some sellers came forward and took the main equity markets back down to where they started the day creating a clear shorting pattern. No instruments correlated with this pure equity move. Sure some instruments came off their highs but only the equity markets produced that clear pattern and nearly 100% retracement. A pure pattern trader would have sold this market as the pattern printed south. This is where pattern trading system fail.. imo..(below a short term chart of last 48hrs or so price action on dow/ym).
The price action in the prior 3 weeks has been sedate.. The longs were in control even as the market sold off. Again yesterday although price covered a long way in short time there was no contest and none of the bars where very significant.. it moved down in a very controlled way with no contest on a broad market instrument based up day. This made me cover my shorts rather than join the pattern and add more. The reverse in fact of what a price pattern trader should do.The price action informed me to doubt the pattern. So what did occur is a good question to ask? Imo, we got a big market reversal in the run up to this. We had a short squeeze move in the prior weeks to this. The short squeeze was hard and fast. The raiders went long and loaded up to quickly roll over the shorts. The shorts had to buy and added to the momentum up. A near straight line of approx 900 ticks (dow) was produced. The longs then wanted to bank their profits and they took the opportunity, having cleared the markets of shorts to off load, yesterday.
This is, imo, what occurred. The market is sort of even now.. the raid is over. The episode has demonstrated the weak short hand. The momentum in this market is still up in spite of all the bad news around. Very simply the negative interest rates and threat of yet more monetary easing and deficits is keeping participants from wanting to hold cash.. cash remains trash for the moment. It will do until participants are forced to leave their assets. When they do it will be unruly. The rush for the exist will be messy as it will be forced. We cannot know when this market sells off.. the data continues to worse and the central bankers continue to implement negative rates and offer more money printing. Leverage levels are rising, participants continue to add more debt to their trading. Its a crazy world but dont try and get ahead of price would be my comment. Hedge now and again on market weakness is wise but no fast moves betting against this market.. this bull market is intact for the moment.
USD looking for new all time lows. PMS looking for new all time highs. Silver could rejoin her parabolic move and is threatening to breakout of her recent range. Oil back to nearly 100usds nymex and brent looking for 120 again. This is in spite of the Saudi’s pumping more through July(ignoring opec) and the US and Europe releasing 60m bpd from strategic stores. (Note China is still adding to her strategic stores!).
Onwards we go..
(6 votes, average: 5.00 out of 5)
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