Courtesy of Lee Adler of the Wall Street Examiner
Today was a perfect illustration of the old idea that the more often a trading range is crossed, the thinner it becomes. I won’t be impressed with the sound and fury until there’s a breakout from the range, one way or the other.
So is the pattern of the past 6 months a major trend top, or is it just a big consolidation that will lead to another upleg in some months? The market hasn’t really told us. The building negative divergences on long-term charts look ominous, but the flip side of that is what technicians call an “internal correction,” usually only after the fact. It means the indicators correct but prices don’t. I don’t know what it is yet. Long-term indicators haven’t quite gone full out “sell.” The market has yet to tip one way or the other. And I’m reluctant to believe that we can have a major bear market as long as the Fed and BoJ continue acting like madmen in forcing a couple trillion bucks into the market in a year with no end in sight.
I’ve warned that October 10 was the day the Fed was scheduled to start its big round of mid-month MBS [mortgage backed securities] settlements. Lo and behold, surprise, surprise, huge rally after a hot stove touch of support. Am I annoyed? Hell yeah. Rigged games annoy me. But they make the rules, and we need to understand and play by them, or lose.
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