We are not going to complain about the fake China trade news that moved markets yesterday. We just want to concentrate on:
The reaction was good…and now we have another little gap to the upside this morning.
The DAX, the CAC and the FTSE break above the 50 day average this morning. This on top of our major indices.
While still not a lot of names moving out of range and breaking out…there are a good amount of set ups.
Bad news has been bought. JPM, PNC and a few other names opened lower on missed earnings and rallied. Good news has been bought up…a GS comes to mind.
On January 4th, we heard the magic words out of Powell. He was now going to react to worsening markets. On top of that Mnuchin called a meeting with the “President’s working group on financial markets!” AKA “the plunge protection team. On top of that, China has been easing culminating with a whopping $83 billion added to the system in one day this week. And lastly, Japan and Europe, who have been telling the world they were going to stop printing money…well, that ain’t happening. So when people try to tell you markets are moving up on fundamentals, remember, we came off our bearish stance on January 4th because of all this.
But as we have told you, we follow certain rules.
#1- IT’S NOT THE NEWS. IT’S HOW MARKETS REACT TO THE NEWS.
#2- SEE RULE #1.