Yesterday, I examined the possibility of Dec 1 low being a wave 2 of sorts, and said that I would consider the long side of the index if it stayed above 816-817 area. Today, during the pre-market action, when the index was nicely down, I established a long position, it worked very well but the wave action that evolved had me concerned and I closed into the ending rally. This is a 60-minute chart that we saw yesterday. I have re-labeled the Dec 1 low as a minor A, only because the rise from that low started doing overlaps, and lost the clean impulsive look I expected.
Of course, one can argue that it is a more bullish count of a 1-2-i-ii-1-2 nature like this 5-minute chart
There are other ways I can count this and make it look good for a bull, maybe like this
But stepping back, and looking through a 60-minute chart, the whole thing looked like a flag, and I was not comfortable with it.
If I am wrong, I will join the party at some later point.Overall, volume was good, look at this 5-minute chart of SPY
Nice black volume bars in the morning and in the afternoon.
Breadth was OK.
Index is back at the steep downtrend line, again, another reason I gave the benefit of the doubt to a more cautious stance.
Nice black volume bars in the morning and in the afternoon.Breadth was OK.
Index is back at the steep downtrend line, again, another reason I gave the benefit of the doubt to a more cautious stance.
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2 comments:
Hi forgive me if this is a duplicate: Do you think the rally in USD is our clue to equities? Maybe SPX trades one more leg lower as USD finishes leg higher?
Hmmm!
This is one of those multi-billion dollar questions.
let's step back and ask a preliminary question,
do we think the intention is to reflate the system back into life regardless of the consequences?
if the answer is yes, do we think they will be successful before deflationary forces can turn this into a self-pepetuating fall of all prices?
if the answer is maybe, then how can they do it? Other central bankers have room to cut, but the FED does not, not in a meaningful way.
So what can they do? They need to bring the yields down across all durations. Near end of the yields is effectively 0, longer end of the yields has been dropping, that without having any meaningful room to cut, may mean monetization at the longer end of the bonds, which, in effect is, monetization of the debt, let's keep in mind that US debt is denominated in US Dollars.
If that is the reason behind the the rise of the long bond prices, at some point it may overwhelm the global exchange system with the prospect of so many dollars to finally make a meaningful dent into its value.
Now, the reason I am saying all of this is because as far as equities are concerned, the basic question to ask prbably is: are we going to have any economy 6, 12, 18 months down the road so that the equity market can finally start discounting it in?
righ now the answer from the market seems to be "no", or at best "we don't know yet", that, IMHO, is one reason why all rallies look like feeble knee jerk reaction to oversold levels and technical conditions.
back to your original question, I think, Dollar rally is one very key factor, THE key factor if I am righ that the only weapon left is monetization, and that is a factor in determining if we are going to have anything left, if the market senses that there will be things left, it may start discounting a better future.
remember we may have a rally to 1000, 1100, 1200, whatever, and if things are not righted, it will fail
Now, that is all in isolation, if some other powerful central bankers, especially the main creditors of the US debt do not go along with this scheme, well, I don't want to think about the consequences of that.
hope I could at least convet what I think
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