THE DAY THE WORLD FOUGHT BACK
As those of us who have traded for awhile watched the metals markets the last few days, we knew with pretty good certainty, this was coming. This bar may not look like much on this chart, but this range from high to low was almost $15000 per contract. Folks that is so insane, I have no idea who in the world is actually trading this market here? I suspect it is individual small investors just chasing the momentum, then fleeing in fear when that monster reversal happened. Is this a top, who knows? What it is typical of though is a big picture top. When you start getting this type of volatility, the market is speaking. What it is telling us is that the general equilibrium it has had during this run, has been disturbed.
We know just from reading the papers, that foreign nations are not pleased with the NEW COMMERCIALS and the market manipulation they are conducting. If we look at the Dollar Index and also the individual currencies, we are seeing the signs of a potential huge reversal setting up. As I stated the other day, we may be on the verge of a worldwide currency war here. Here is something I just noticed yesterday, just when things have been sailing along so gloriously.
In the NAZ we all of the sudden have a 3 point divergence in the momentum indicator. I shorted a few stocks on Monday that had good individual sell patterns just because it is all I know to do. I have to take the trades when they are there, and let's face it, shorting into this 20 foot swell has not been a very good idea in recent weeks. I had no hopes for those trades, I just did them because I am a trader and the patterns were there. The market manipulation has made the market very unbalanced, but that does not mean I don't take sell patterns when they occur. My feeling had been to just look for a correction this week as I stated on Monday. Now that the above reversal pattern is here, it might be time to look for shorts when we bounce here, especially in the NAZ. I think this is especially meaningful because this index has been leading things for a couple of months now, clearly it has been the strongest. We now have a fly in the ointment.
In summary here is what we have currently going on. First, the world is trying to prop up the dollar, the NEW COMMERCIALS are trying to depress it. We have blow off conditions in the metals markets that could lead to a shocking decline there. The individual currencies are showing signs of weakness. Finally, we have a big divergent reversal pattern in the Nasdaq 100. This cumulatively, tells me we got some trouble here. If you are long, it might be time to ring the register and pat yourself on the back for a job well done. This is not a time to be greedy. If this were to get away from the NEW COMMERCIALS, the rate things could decline could be shocking to many people. This is the air pocket of all time they have inflated here. Maybe they can save it here, but alot of taxpayers dollars might need to be used if this gets going on the down side.