Yesterday, we had a continuation of weakness that has been uncommon. It is a function of a lot of complacency leaving many without put protection, and stronger economic data stoking the tapering fears again. Today, we had another fakeout after a stronger first hour, and now we are going for 3 down days in a row, which is definitely a change in character since we bottomed in October.
I see a confluence of strong support around 1770, so we have limited downside here. The US is still the strongest of them all, with Europe now crumbling, because it doesn't have the POMO program to pump up their markets. We are getting very close to a beautiful BTFD moment. I don't see any deep selloffs unless the Fed surprises the markets with a December taper. With the 10 year yields where they are, they will not rush the taper, and will wait and see. Buying the close today should prove profitable by next week.
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