This market is throwing out all the patterns from the past. It goes up in a straight line and goes down in a straight line, with very little consolidation in between. We are not down because of Greece, they are meaningless. We are down because too many fund managers got nervous being left behind and chased the market higher after the good news came out! Now they are caught with their pants down after buying the euphoria (which was on huge volume as mentioned last week). Calls for new highs, 1300, they were all signs of a top.
We'll have a nasty down day today and then we'll probably grind higher slowly on a wall of worry.
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9 comments:
People have written off the elliot wave crowd... I suspect that will have a little bit more time in the sun given how this latest downturn has panned out. And while Greek doesnt matter the Italian 10yr is close to break to new high, 6.33% versus the high just before ECB started buying of 6.39%.... contagion is entering the core.
Market built no foundation and moved 210 points in 3 weeks. That is a giant move that left it vulnerable to a big whack lower. Today is flushing out the weak hands and we'll go back higher again.
Chicken littles are panicking over Italy but will calm down once the ECB starts bidding for Italian bonds in the open market.
I just don't see where the deep pockets are going to come from, the market isn't cheap enough. Many with YTD performance back to respectible levels afer Oct squeeze I suspect with fold their hands and hope for a better 2012. I think this the start of another major leg down rather than a breather.
The Fed is doing a stealth QE3 with Operation Twist. There is a ton of liquidity in the US market. How else can you explain a 210 point move in 3 weeks?
MO - Why not short covering by the bears and leveraging up by the bulls?
Just like the mid-June to July 8 rise that went straight up ... and preceded a few weeks going sideways, and then a crash.
Market action has been very similar this time.
MO, it looks like we need to take out 1190 before resuming higher. What do you think the chances of a gap up tomorrow that is sold down to 1190?
Very low. If we gap up tomorrow, I don't see 1190 happening. FOMC meetings usually are up days anyway, and with the market already selling off 60 points in 2 days, we probably have a gap up and an up day tomorrow.
Virtually impossible to trade. Unless, that is, you are really adept at 1) taking losses by closing positions quickly (a big psychological problem for most people, including me), and 2) putting that money to work right away in the other direction.
But one general rule still holds: take profits on the short side when you have them.
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