(For What It’s Worth)
As I’m sitting here perusing different markets and indexes, one saying keeps popping into my mind: Mission Accomplished.
Since the sell off last week that scared the central bankers of the world into hyper-drive, whether it’s been jawboning or implementation, the “markets” have responded in their usual fashion. i.e., making those that never saw the potential for such sell-off back into “genius” status. Not to mention the name calling like “Crying Cassandras!” and more directed at people like yours truly. You know, now that what we warned was possible has come to pass, but has since been erased via central bank infusions, rinse, repeat. But I digress.
It’s important to note and clarify the above statement on central bank infusions, because that’s precisely what we’ve had pushed, once again, back into these very shaky markets. e.g., First it was the ECB, then the Fed, then China, the BOJ, and now the ECB once again. This has taken place daily since Friday of last week till today, everyday.
Now with the passage of the stimulus it appears the only thing that can derail these markets, once again, is (wait for it…) a Fed conclave on Tuesday and Wednesday next week. This will probably be the most important meeting and presser for Mr. Powell this year, for all eyes (not to mention Sell and Buy buttons) will be fixed. Interest rates for YCC (yield curve control) inflation expectations and current assessment will all be front and center. Far more than they’ve been over the past year. Repeat: far more. And, what’s very possible is this – the “markets” may not wait and will try to force their (the Fed’s) hands.
So, what I would like to bring your attention to is what I’ve noticed going across many different markets. What I’m seeing is pretty much the same, everywhere. I’ll show it below using the S&P 500™ E-mini futures as of this writing around 9:00am EST before the U.S. day session begins in earnest. To wit:
What the above implies is: exhaustion. It is these types of patterns that have a very high propensity to resolve in the way most calculate. i.e., they’re indicative of what one thinks after one throws the kitchen sink, meaning, gravity resumes its pull and can end in two manners. Such as…
The price never breaks out above the top line and then just begins to wither away falling through the lower, then picking up steam. The other…
It breaks above the top in a burst, possibly even breaking above the “all time high” mark. then, begins collapsing to fall back below where it all began, sometimes even more, sometimes, much more.
This doesn’t mean that’s what will happen. It’s just from a technical analysis viewpoint the above have a very high odds of either working out as such. The reason for it is in that compression. It’s signals like these that traders used to make their bread and butter – today – it’s the algos doing much the same. But, no one’s quite sure any longer just how the bots position for it to their advantage, for they’ve purposely removed (aka annihilated) any shorts sellers that used to take on these trades in size.
That’s what you can do with endless free money, but that’s for another article. But again, I digress.
That’s pretty much all I have to say on the above, but let me remind you with one small caveat…
It was precisely one year ago when moves like the above were taking place and everyone was shouting from their laptops “The coast is clear, buy, buy, buy!” (Remember the buzzer banger?) when I said: not so fast.
And everything fell apart where the Fed basically had to all but double its balance sheet to save it.
As always, we shall see. But, that’s what I’m watching, for what it’s worth.
© 2021 Mark St.Cyr
Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.