As I’m looking over some charts a repeating pattern has caught my eye which I think is worth mentioning.
I’m using the S&P 500™ futures chart as the example, but it’s pretty much the same thing across not only the other main indexes, but individual stocks as well. To wit:
The above depicts the S&P futures via 15 minute candles/bars. As you can clearly see since the December plunge the “markets” have been on a one-way-ticket up supplied by a “phone call” and a presser for verbal capitulatory signaling.
However, that one-way up has been more of a stair climb as opposed to rocket ride when viewed via this prism.
“Does it mean anything?” That’s a good question, for it might and that meaning is this…
The “capitulation” trade may have finally reached the exhaustion phase.
As you can see, these stair steps (or consolidation areas) have been pretty consistent in both time length and just how much of a bounce up happened following each. This seems to be a clear pattern of pure machine buying.
In other words, it’s not (my conjecture) people – just machines gaming each other.
The reason why this observation is important is because, if you listened to the mainstream business/financial media you would be hard pressed to hear anything other than “people are once agin buying this market because, it’s now a bull market backstopped via the ‘Powell Put.'”
The issue with that conclusion is, if that were true, then why has there been more outflows (some $40 Billion) leaving the “markets” during this up move than has come in?
Also: Friday was the one of the lightest trading volume days in recent memory and the volume for this entire rally has been particulary low. That’s not a good indication for “sticking power.”
Let’s just say this type of “sticking power” can suddenly turn into getting stuck – and hard – in the blink of an eye.
“Does this mean it will?” I can hear you asking? And again, good question, but no one knows. It’s just something that requires careful watching for those looking for clues, because all the ingredients for a quick reversal are currently on-the-table and set.
As always, we shall see. But this is one of those moments, once again, that demands one to pay attention.
© 2019 Mark St.Cyr