I told you so (actually I told everyone on TV Tuesday afternoon). I like the fact that BNN ran a caption in the box saying "Davis: Bank of Japan May Drive the Yen Down and USD Up." The only correction there is I didn’t say "may" – I was pretty darned emphatic that is WOULD happen this week. Well, it happened last night as the BOJ stepped in and made a huge move, dropping the Yen from 77 to the Dollar to 80.27 at about 6am, which is a stunning 4.25% move in a single day in the World’s third largest currency. At the moment – everything I have to say about the market movement I said yesterday in Member Chat when we discussed the day ahead:
Big Chart – That’s a very nice move by the NAS! Huge tail and formed a whole candle over the -2.5% line! Unfortunately, everyone else ground to a halt at resistance but, if we gap over tomorrow and finish at Monday’s close – all will be forgiven, right? Kind of scary when you see how well these lines work – think of how long we’ve been using them. No moving average, no slanty BS no redrawing them with new levels every day – that’s the 5% Rule!
Note also the last time we sold off hard, it was the Nas that led us back over the 2.5% line and stopped at about the same place it stopped today so look for that June 28th candle to repeat if we’re on the way to a healthy recovery. It makes sense that the RUT fell out of favor as the reality of earnings favors the Nas and is not good for the RUT – who have mostly US revenues. That’s why TZA was our primary hedge at the top. Now we have to figure out how much actual damage was done to the RUT’s prospects by Q2 earnings.