OUR OWN INDEPENDENCE DAY! THE DAY THE WORLD FOUGHT BACK
After the world had a good kick return as I mentioned which took place over the holiday, a funny thing happened. The world went on to make several consecutive first downs on the way to a scoring drive against the PPT. It reminded me of the scene in the movie Independence Day where the President was rallying all the fighter pilots, saying let this day be the day we fought back! Against the never ending efforts to prop up seemingly every 5 minute bar that closed lower for months on end, enough volume showed up today to reverse the PPT's save attempt that was launched right after the US opening. It did appear to be in process to being saved, then all of the sudden, boom a big selling wave rolled it over. This has been so rare I cannot tell you, virtually non-existent in this rally. Two way action used to actually be normal intraday.
We knew there would come a time when some type of correction would take place and I told you all it would come out of the blue and be a V type of formation. Hard to imagine more of a V than what that chart above of the NAZ looks like. Now I did not say it was going to be today, I did not know. I do now think the plan has to be to short the bounce when it occurs. Some markets just cratered today, COPPER, the Grain markets to name a few of them. We are seeing now some markets finally trading on their own fundamentals for the first time in a year or so. Is this the end of this incredible rally? The dollar acted very strangely today, so maybe it is going to trade on it's own merits now as well. Recently it has been so closely tied to stock prices in an inverse fashion, it would have flown on a day like today. It went nowhere, very interesting.
I have absolutely no idea as to whether we recover quickly and move on to new highs here in the indexes or not. This has gone so far beyond anything reasonable already, that it is really impossible to even venture a guess. All you have to do is trade off your signals, and that spares you the misery of constantly altering an opinion to try and get in sync with what might happen. When you get artificial markets, reactions are going to be violent. I also mentioned the weakness in the BOND market and showed graphically how that has presented problems in the past. This is what has happened during those past formations I showed. Due to that being in place, I have been hunting individual stocks trying to find those that are showing relative weakness against the overall market.
Below are a couple of trades I got into today. I had been talking about COPPER in prior posts based on the COT picture there. It finally setup to my liking yesterday, so I got short last night.
This market had been lagging a little recently having shifted from the strongest metal to the weakest in the last two weeks, so that was my cue to start looking. The next chart is one I have just been dying to play ball in, Goldman Sachs, the evil empire.
This was a little different entry, I really thought it was setup on the weekly chart. I am shifting to trading stocks more off weekly than daily to try and catch bigger moves and get less chop. This is how it looked on the daily when I entered. Although being short this stock with the close ties to the PPT is not big picture a great idea, the pattern was there so I took the trade. Goldman is rumored to be one of the houses that executes the PPT trades and hence why the government always takes care of them. I did short a few other things today, mostly stocks.
I really have no idea if this quick burst is all there is to this or not. It certainly would not surprise me if this got reversed. However, if sell volume happens to stay strong, the PPT will not be able to stop it. If it dries up, the PPT will be able to reverse this whole thing right back up. For now, at least the world had a day where market forces worked. Time will tell if it is just one touchdown in a 62 - 7 blowout, or whether we can make a game of it like we used to be able to. If you are not short anything yet, don't chase today's move, wait for a bounce even if it comes from lower levels. We are already very short term oversold in a monster up trend, so odds do not favor entering new shorts following a day like today.
It will be interesting to see how many readers I get after today. For some reason my blog always gets heavy traffic after big down days. I always wonder why, perhaps it is people scouring the web trying to find someone new who can give them some type of explanation. Sometimes there is no explanation even though the media concocts one embarassingly ignorant reason after another to try and explain every move. There is a great deal of random action, it is what it is. Today was a long time coming and there will be more even if it is not tomorrow.