As I stated prior the reason why I’ve been updating my observances of the “markets” is because I believe we are quite possibly on the precipice of what could turn into a very extreme situation, not only rivaling anything we’ve seen this year, but since the original ’08 crisis.
So with that said here are two charts I showed the other day and what and why I was watching. To wit:
Now here’s an amalgamation of those same two as of Thursday night after the markets have closed, again, to wit:
Let me explain just a bit for those who may be looking at it and think “that’s not the same.” It is and it isn’t. What I’ve done is this, this morning I recreated them and added some different objects or drawings onto what I had done prior and watched to see how the market would play out and would it follow within anything I composed. The result price action actually astonished me.
You don’t need to be a “technician” or “chartist” to understand what I’m going to say next, all you need to understand is when it comes to this type of stuff that I do. Here’s what I’m noticing…
As I stated the other day, this entire move that everyone has been knocking over their own mothers as to get to a microphone, keyboard or camera and tout “The Fed Blinked, that’s it!” I believe have made the wrong conclusion for the wrong reasons, and that the move yesterday was nothing more than another exercise in month-end window-dressing using an obvious catalyst. e.g., The Chair’s speech.
Again, as I hypothesized, if their conclusions were correct then we should still be on some sort of rocket-ride, or at the least, we should be at worst what is called “unchanged.” But we’re not. In actuality the markets closed red, as in down.
This subtle distinction and now factual outcome calls caution into the forefront far more than some “We going higher” type of scenario.
The latter chart shows a few very key issues that need to be paid attention to. Here’s a short list:
- The shape of that improvised channel on the lower chart is actually following the exact path of the first smaller one I posted on the top chart. The only difference is that I enlarged it to become more of an improvised mean reversion type with an inner segment. Again that segmenting is directly on top of the smaller one I drew in the above, which is why its so interesting from a technical observation.
- The next is the area above and the line beneath called “no man’s land.” This I adjusted just a bit as I zoomed in to make it exactly 5 points higher – and five points lower encompassing the 2750 level. The reasoning was simple: Markets love big round numbers into months-end and this is considered just that. Also 5 points above or below are where usual resting stop orders are located. If this was just a melt up to get to that level using the attraction of these stops via hunt-and-seek programs, then stopping within and then either flatlining, or reversing, would be one more arrow in the quiver to the “it’s not all clear – it’s something else and it aint good.” And that’s preceicly what happened.
- The last is this – as I type this – the futures or overnight session these markets are showing no signs of trying to levitate from their session lows. That is what I’ll call “another arrow…”
“So what does all this mean?” you may be asking. Good question and it’s this:
As of tonight (being Thursday in the U.S.) there seems to be more evidence to the contrary of what has been touted across the mainstream business/financial media and caution should be the order-of-the-day going into the weekend. I myself would put that caution level at 11.
Can it all turn around and we’re at new never before seen in human history highs before year end and maybe even by Monday should everything go just swimmingly at the G-20?
Absolutely. However, with that said I’ll just point out as we sit here currently the preponderance of evidence already displayed is beginning to make every one who touted “The Fed. blinked!” wrong. As in – dead wrong.
As always, we shall see. But not trying to do just that is not an option for anyone trying to stay ahead or prepared. And in business today, that’s just not an option for anyone who takes their business or profession serious.
The stakes are that high. And that’s not hyperbole.
© 2018 Mark St.Cyr