As I look at the broader capital “markets” this morning I’m struck by just how paused of a feeling they all seem to be exuding. Like they’re waiting for something. Well, in reality they are and the news may make or break the “markets,” literally.
Let me frame my hypothesis using the the following “picture” of the S&P 500™ via the futures. To wit:
The above is represented by 15 minute intervals of bars/candles and it possesses a few very interesting expressions for those with a technical eye, which I have.
As you can see the “markets” have pretty much followed the exact path or psychological manifestation that I said it would using the 2800 – 2600 levels calling it the “manic – depressive zone.” i.e., if the 2600 area holds they’ll be a sharp rebound to about the 2800 area where everyone will think the past is behind us and nirvana awaits, then if it can’t go higher and reverse everyone will flip and start clamoring “the end is here!” and so on and so forth.
However, what’s now caught my eye is not only where we are now, but how languishingly it has got here followed by where it seems to be both running out of gas, as well as the level.
I highlighted on the chart what are called fibonacci levels. There’s no need for you to understand them if you don’t. All you need to understand is that I highlighted two very technical patterns and levels that have very high odds for their meaning as they’ve proved over time. These are the blue boxes and highlighted blue line on the above.
As you can se we are within a whisker of hitting the 2700 level which I show with that right side box. All of these together i.e., big level numbers, multiple fibo#’s and patterns, what’s also known as “market breath” and more lining up all at the same time is when big things usually happen. And by “big” I mean just that. i.e. the market could rocket skyward in a fashion that make Elon Musk envious. Or, could suddenly tumble in what some might equate to having the rug pulled out from under them and the floor’s gone also.
The largest factor that I believe outweighs most others is that the Fed. Chair Jerome Powell gives a speech at around noon ET that may set the stage and influence the G-20 in ways that “markets” may not wait to see what happens good or ill over the weekend.
What they may be more inclined to do is make their move now as to try and sure up any positive move as to try to close out month end positions or, pull their hands in and dump any and everything to to cut any further losses, again, to close their books for months end.
Understand, what I’m not trying to say is that “we can either go up – or we can go down” and have it both ways like so many do. What I’m alluding to is that I feel we are either going to suddenly rocket higher on any interpreted good news that has the potential to put these markets back on course for being able to tout “new highs!” Or, we have the potential for it to get really, really, really (did I say really?) ugly – real fast.
What I don’t believe is that we’re going to just ping pong back and forth in this “manic – depressive” area much longer.
Doesn’t mean any of the above will happen, but this is what I’m looking at and what I’m concluding. As always…
We shall see.
© 2018 Mark St.Cyr
I just finished watching Mr. Powell’s speech and all I can say is I didn’t hear anything that signals what I’m currently hearing across the business/financial media via many a talking head (cough Cramer cough) professing something on the lines as “That’s it the Fed’s blinked!” and so on and so forth. (Earlier article “Where We Might…” found here)
Maybe he did and maybe he didn’t, but for those that want to know here’s what I was watching from the moments his remarks were first reported (as in released prepared text) the instant reaction to that via the headline reading HFT algorithm trades. And then the reaction during the actual testimony and after its conclusion. This is what I noticed. To wit:
The above is the S&P 500™ using one minute bars/candles. Via a technical perspective what I saw was a knee-jerk reaction to a very easily defined pattern which would infer a short covering move with a run up to the highs of the day – a wait and see what else can be inferred as the Chair spoke – then another resolving of, again, a very well defined technical pattern.
So far this final pattern seems to be resolving like one would infer which is – now resolving lower.
Doesn’t mean it will stay this way or continue, what I am saying is that I didn’t hear anything like ” a soothing cooing of dovish nature” as what seems to be what everyone else is trying to imply.
Yes, the market rocket higher, but higher – not like some blast off that one would conclude should have happened if the “Fed. blinked” as is being portrayed.
As always we shall see, but at least we have something to watch for clues. i.e., follow through to the promised land from here. Or – a failing and retracing into the G-20.
Just sitting and waiting here at these levels is not a vote of confidence for “the coast is all clear” in my view. From my perspective it all seems nothing more than a technical reaction. And if I’m correct, then these calls of “blinking” are going to find out what the term “It’s all fun and games till someone loses an eye” means in the front-running “blinking” narrative.
As always, we shall see.
© 2018 Mark St.Cyr
Addendum to the addendum:
The only reason for this update is because I feel it’s important. (Earlier Addendum is here)
As I’ve watched and read many a prognostication on the so-called “understandings” made in reference to the Fed. Chair’s latest speech I thought I’d follow up with what I’m looking at currently with the recent move now fully expressed for the day. Here’s two charts that are updated versions of what I showed earlier. The first is the futures. To wit:
As one can see the move broke right through my original observations. However, where it stopped, or fizzled out as some might say, is also of interest.
As I noted the area notated as “no man’s land” represents nothing more than that. i.e., it means nothing unless the market breaks above with some real follow through.
On the other hand, not breaking through or not traversing higher into that realm says far more should it not. The reasoning is simple:
If Mr.Powell or as some commentators are now expressing i.e., “blinked” then there is no reason for this market not to pile onto this already hearty move. For if they don’t, what it shows more than anything is that my hypothesis of nothing more than another version of Month-end window-dressing has taken place on the back of an event that was used for a catalyst and has now run its course.
Who knows? No one one does. All one can do is watch for clues, but at least you now have something to watch for and make your own judgements in the overnight and before the open.
As far as what is called the “cash” or normal markets everyone thinks of when thinking about them here’s an updated version of the same one I posted prior for that, with an additional notation. It pretty much speaks for itself, even for the non-technical watcher, again, to wit:
So there you have it, what may come no one knows, but at least here’s some frame work to go by, for as always…
We shall see.
© 2018 Mark St.Cyr