Market indeed gaps up. Bear market turns into bull market in less than a week off of a major change by the fed and not so major change with China trade.
Normally, we could care less about the news but when the fed is involved, it is more than material.
MARKETS ARE NOW RIDICULOUSLY STRETCHED, EXTENDED AND OVERBOUGHT ON ANOTHER NEWS GAP. We gather many or most believe a pullback has to happen. We are not so sure as we are in December. We do suspect we are going to back and fill just because we are now in the midst of massive overhead resistance…but to be clear, market has already blown through resistance.
More to come. Going to be an interesting day, to say the least.
-Never met the man but more than being the president for 4 years, George H.W. Bush was a great husband, great father, great grandfather and great friend…and that means more than anything. RIP!-
Futures just rallied up to be flattish. Something about the G20.
Keep the big picture in your sight. Down 2,000 DOW points in 9.5 days…1,100 of those points Thanksgiving week. Rally up off the fed about that same 1,100 into massive massive resistance. On top of that, except for the DOW, everything pretty much remains BELOW the 200 day moving average. The TRANSPORTS are better because of the oil crash.
We believe we have seen THE LOWS for now. This simply means THE LOWS we just had will not be breached any time soon.This does not mean we do not pull back a few hundred…and frankly, would be normal. And of course, nothing is guaranteed so if we see serious distribution show up, we will know it.
One area sticking out is SOFTWARE as a bunch of names now coming up their right side. It looks like CRM’s reaction helped. Another name, WDAY, gaps up this morning to new highs on strong numbers.
Otherwise, we suspect we now have some backing and filling and see what comes out of it. Today is end of month and then we head into what is supposed to be seasonal December strength…supposed to.
We believe the most important part of the equation is that the fed blinked AGAIN. For years, every time markets get in trouble, they have blinked. Maybe one day we will get someone who lets markets be free or maybe there will come a day where markets stick the middle finger back at the easy money moves. We also believe any further upside will continue to be narrow as too much stuff just aint happening.
This past Monday, we called for A LOW…not because of strength but because how weak things were. The DOW dropped 1100 points Thanksgiving week and 2000 points in less than 10 days.
We believe the fed just put in THE LOW. Readers of this column know for years we have thought markets and assets were fed-induced. To this day, Japan and Europe still have negative rates and are printing money. Our rates have been a joke as people try to tell us 2% is tight. 2% is easy yet the fed again blinked to defend markets and to keep the president happy.
So…for now, we think the A LOW is now THE LOW. This does not mean we do not pull back or retest…just that the fed, for the umpteenth time since 09, has put the floor in instead of letting the markets be free. We would love to see some pulling back in here.
There is still not much leadership as all that has happened so far is that the markets got back the Thanksgiving week losses…but if this is going to last, leadership will indeed show up. The question is whether markets get going to the upside. That is another story. There is a ton of resistance and a ton of broken price charts that have to be worked through.
Futures are down but down modestly in comparison to yesterday’s gains.