I love it when a plan comes together!
We promised you M’s and it’s M’s we have but let’s take a closer look at what’s going on. EVERYONE blew their 2.5% lines yesterday and we had a bit of a recovery but only because the Dollar went from 76 at the open down to 75.35 at the close. That’s a 0.85% drop and what did our markets do? Other than the Nasdaq they all finished in the red. If an almost -1% pullback in the Dollar can’t move the price of equities up even half a point – the VALUE of those equities must seriously be questioned.
I set the following retrace lines for Members at 2:18 in Member Chat – these are what we call "weak bounce" levels off our 5% Rule – anything less than this and we remain bearish:
- Dow 12,505 (the 2.5% line) – needs 26
- S&P 1,333 (the 2.5% line) – needs 5
- Nas 2,767 (the 4% line) – over by 13
- NYSE 8,362 (the 4% line) – needs 29
- RUT 823 (the 4% line) – needs 5
The Nasdaq close was SUPER FAKE yesterday as was the take-down of the Dollar but fake is effective in this joke of a market and David Fry made a good comment on the action:
With markets now at least short-term oversold bulls took a stab at perceived value and/or defended open long positions late in the day. But sometimes this type of buying is wasted buying power against a poor economic backdrop and with earnings season done. This leaves only QE to get them buying.
Note on Dave’s Dollar chart, that we were soundly rejected at the 76 line, which is to be expected on a first attempt but not all the way back to 75.35 – that’s overdone by any stretch so we woke up early this morning and shorted oil (the new July contracts) at $99 on expectations the Dollar will come back today.
It’s very easy to shove the markets around after hours and in pre-market but it’s very expensive to do so once the bell rings and the Fed is stingy today and tomorrow with the POMO, with just $2.5Bn scheduled to be handed out to the Banksters each day – barely enough for Lloyd to tank up the limo!…