rear-view ......the release, like most releases, gets covered and it's rare that a news release isnt retraced whether to simply take out stops or test retest and establish a value zone......so we did that and the signs were pretty good as you can see from the above chart and that gap would get closed.....the main point was the analogue to the recent daily low when the cash market came back down and took out the stop low of the futures contract......this is usually (as in that instance) a very bullish scenario and as the low was taken out in the spx the back and fill began, i mean like, you could almost hear the click of machines and keyboards with 'wakey chook, time to buy'.....slow steady sell into the open, post news, the cash action was steady and healthy distribution then suddenly back and fills came in upon covering the release price of the future by the cash......time to exit the short and get small longs...... whack, Italy.....double whack, Spain, fer fitch sake!.......expect a follow-through on monday......friday after major numbers like FOMC, NFP or ISM's the vols thin out very fast, best strategy, cash, watch, log the patterns, note the action........
a few technicians are noting the extreme lack of volume for this bounce/rally ......suggesting to me we are still locked into a large amount of shorts, that when forced to cover, will pull a vicious rout and rocket the indecies......but, daily, there is a small clue to the truth on what's going on......the TED (even the TLT).....it keeps climbing......you see, imho, we cannot pump-prime and climb on healthy basis when cheap credit is not just being seen as unacceptable but is being rejected, a liquidity extraction by stealth.....that doesnt mean we can't hit the targets i've sighted in the daily fibo-lattes (see earlier post) but if we hit those targets at speed, without establishing heavy zones of value, then, its a technical dash for cash, a force-majeure which, again, makes me think we'll get a strong and unsustainable release of energy from covering.......
........October is known as the the bear killer despite medias attention to rare one-off events as sept is usually the worse month, historically and typically, october is the inverse and this time appears on cue to recycle that action and we tipped into official bear market %'s in the US this week and often we'll find an initial test of that % move followed by a close relief which we have yet to finish upside.....the challenge is that the % bear trend has taken place on a massive monthly basis and we have dodged the bullet first time around......the gun is being reloaded.....refer to my earlier chart on the 12 sma and you'll note that the 1265 area is where we need to cross it now and by the time+price we get there that 12sma shall have been dragged upwards and lift above the 1319 level.....looking at todays price close that 1319 level seems a very long way away however there are some big gorillas in the jungle who allow you to walk in their direction and not against them so they go where they want to go and we follow but there is also a mass movement on each monthly down-slide that has created a huge distrust in "everything-equities" and once that ball gets rolling with the 40 year cycle its hard to put the genie back into the bottle......enough euphemisms, you get the point......as a guesstimate we have some 50+ t'days to go for the jan, an opportunity to sell, exit longs, position for a large sell......again, outside of a 10 second to 10 minute chart i get very uncomfortable, but, a plan has to be made.....
i've att the dow chart view to go with the earlier spx chart fibs.......note that the dow target is much lower, correct or not, i am sighting the dow to lag upward based on the short covering reason and as it is a safety/yield index less shorted (at least seen that way by managers) if my knowledge of the early dow days is correct only 2 components survive to today the rest either went through bankruptcy or were taken over no doubt at a huge discount ......the spx being much higher beta than the dow, add the covering, throw in the fear of missing out and bingo-we-go-all-the-bulls-wear-a-halo!
the people who are buying value, genuine discounted levels, historic p/e's are waiting, they can keep waiting until that once in a lifetime opportunity comes and then they have no choice but to act......so, do you think they're buying now and do you think they've seen that once in a lif-time opportunity?
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