Answering a emailer’s valid question!
“How the hell can a market look so bad on a Thursday and just gap up big on Friday?”
We would just love to know the answer to this question. The fact is we have had some great days, only to gap down the next day. Our best answer is when you have so many maniac central bankers around the globe not only making moves but in non-stop yapping, markets can be influcenced overnight. Today, it is risk on as Europe says they can go even further…yes, even further easing than they already have. We have had a U.S. central banker talk about going to 0% rates again. We do not know if that is the exact reason for this morning but we do know they are an influence. In today’s case, the first thing we saw was the big move in Oil and knew futures would be up nicely. Technically, while fiancials are very suspect, other things are emerging like the aforementioned biotech off the lows…and we remain in an environment where pullbacks last a couple of days.
We also wanted to repeat something we saw this morning. It is of interest. Surprisingly, we woke up and read the newspapers as usual…and we must say, most all of the articles had a negative bent to them. That cannot be all bad for markets.
I have it down as a whipsaw environment!. If Retailers can turn up, I have it down as a possible stage setup for a breakout today.
Why is the market holding up ?
I dunno… but I will hazard a guess.
The dollar is extended down, and falling; er,, sort of..
And, the fed meets next week, or so..
The big players likely do not want to short the market in the face of a fed; when the fed speak is known ahead of time, …. “no rate hike”.
No rate hike, means the dollar falls, and market goes up.
xxxxx
And, the xlf was leading down, and it hit the 50+ day moving average, and the banks ,, when they hit support, and hold, can likely hold up the entire market.
That’s the way I figure it.