I tried to capture this chart when it was up for the day, and wound up with unchanged as it ticked right when I did it. We are now officially at ground zero on this inflection point. We have retraced a good portion of the decline, enough that if we get much higher, new highs are coming. If it is going to generate a sell signal I think it will do it right here. My modified commercials indicator does show selling on this rally here, it normally does ( moves opposite of price it is still a work in progress ), so that is not the end all. However, there are a few other things I watch not discussed in here that tell me that if we were to close higher today and then tomorrow take out today's low, it is a sell signal. Will it be any good? Who knows. With the FED apparently having gotten a handle on this decline, I think the odds do favor new highs again until the QE stuff stops. However, I don't trade based on the FED I only discuss what they are doing in here. As a result, this is a trade I will likely do if it plays out this way.
The other problem with trying to trade the FED is that we don't really know what the buy triggers are for the buy and sell programs they are launching in the futures markets are. How can we trade off them if we don't know? They do not seem to be indexed on the disparity between the cash and futures markets, what we call the PREMIUM/DISCOUNT. Most institutions launch their programs off those fluctuating values. The brief time I have spent trying to figure out when they are coming in has not revealed any obvious patterns. The only one I ever found was the fade Barry trade, which was one of the all timers that I wrote about in here. This was not the FED since there were sell programs every time that imbecile in the white house spoke. They are only operating on the buy side. That trade does not work anymore but what a run it had, I think 18 straight wins before it stopped working.
Net net we know what they are doing, but not exactly when or what their triggers are. All you can really do is keep very tight stops if you are shorting anything once you get one big day in your favor. They have reversed so many moves after just one day, that I think it is prudent to keep stops closer than normal if you happen to get big down days in individual stocks or the indexes. Normally this would be the wrong thing to do, but as we know things are not normal. It is generally prudent to give the markets room once you get one good sized day in your direction, so they can consolidate then continue moving in your direction. NOW this is the absolute wrong thing to do.
Here is another chart that is equally well setup but also at a point where the move needs to happen right now or a rollover is coming there.
This is the 30 Yr Bond chart. It is basically the opposite of the stock market and you can see we are on the verge of really rolling over, and we will if stocks keep climbing. However, if this day were to hold just as it is now, going long above today's high tomorrow is what I will likely be doing. The alternative scenario for both markets is if they keep going to buy the first pullback in stocks and sell the first pullback in bonds.
The obvious big picture view is to look for sells in stocks in the June/July time frame when the QE is supposed to stop. There are long term cycles that also indicate high points there, meaning declines should occur at that point. The $64,000 question is of course, will the Fed stop QE at that point in time or not? My gut feeling on that is that they won't. I suspect that they think things are much worse than they are telling all of us, and that this can't run on it's own. I think the recent trial run they conducted where they backed off a little to see what would happen and we cratered, told them they need to stay active. One thing to be aware of is that the only difference between the PPT activities historically, and what we have seen in the last 2 years, is them publicly telling us they were doing it. There is nothing to stop them (NOTHING), from propping up things when they feel it is necessary. They have done it for many years, why stop now. They trash talked telling us what they were going to do, then went out and did it.
In sports the comment when the opposition complains or mouths off while you are rolling them, is "SCOREBOARD." I had some idiot in a blog a few years ago challenging my trading results, so I showed everyone some of my statements from the Robbins entry I had going that year, then also changed my handle in the blog to Chris Scoreboard Johnston. Basically an F U to that moron. The FED has pulled the biggest Scoreboard play in history so don't expect them to go away quietly.
Must see TV the next couple of days