This is so exciting!
The Futures are up, Europe is up, the Dollar is down – despite the fact that the last Fed Statement, the last Fed Minutes and Bernanke's last speech all said, VERY CLEARLY, that there will NOT be any more QE UNLESS the economy worsens. We just had the new Beige Book on Wednesday and, thankfully, the economy is not worsening. Therefore – one may conclude – no easing today. To do so would make the Fed seem capricious and inconsistent and erode their future ability to steer the markets with rhetoric.
Of course, this doesn't matter to the robots who are jacking up the Futures after the foolish humans sold all day yesterday – and the day before, and the day before that, and the day before that. But not last Friday – although last Thursday was terrible too and last Wednesday wasn't so good and last Tuesday was awful – so how about that rally?
As you can see from our Big Chart, we're getting exactly the sell-off we've expected but, as I've pointed out to Members, things are much weaker than they seem as the Dollar, at 81.50, is down 2.5% from where our levels were drawn (83.50) and that means that each set of lines on the chart – including the 50 and 200 day moving averages, need to be moved up one notch and that means the Dow failed it's 200 dma yesterday (at an adjusted 13,100), the S&P dropped below it's must hold line (adj 1,400) and needs to break back over the 50 dma (adjusted to 1,414) in order to get back momentum.
The Nasdaq is still above it's adjusted 50 dma at 3,037 but now need to get back over the adjusted Must Hold line at 3,075. The NYSE has failed all of it's support and has to take back 8,000 for any rally to be taken seriously and, finally, the Russell is right on the adjusted 200 dma at 804 and failing to hold 800 would be a huge sell signal.
For now (8 am), none of that is an issue as the Dollar has fallen another full percentage point (81.18) as the Euro climbs back to $1.26 because ECB Executive Board Member, Benoit Coeure said: "ECB bond purchases in the sovereign debt market must be subject to strict conditionality." What? What do…