"Doubts grew over the sustainability of a rise in U.S. stocks on Tuesday, which came after Federal Reserve Chairman Ben Bernanke eased concerns over the damage to the U.S. economy from a possible Greek default with a promise of more economic stimulus if needed."
Have you ever noticed that there's always a pundit or news organization that has a reason every day for what the market did what it did, some ignore plain facts suh as correlations like the Euro and rather have some story (and there are hundreds to choose from everyday). For example, the market went up because of a speach by a Fed president in which he said he's open to the possibility of further monetary policy, but they totally ignore a rally in the Euro which has nothing to do with the news event that should be dollar positive.
After all, if we weren't given reasons for why the market behaved a certain way, we might start to ask questions about what really moved the market and those are questions Wall Street doesn't want us asking after a multi decade propaganda campaign to tell us market manipulation was something of the past, even though Jim cramer brags about how he would manipulate the market and futures and how it was fun and if you are a fund manager not willing to do it, you shouldn't be in the game.
I do believe there are some stories that clearly move the market, but I also believe market move are set up in advance and a story is a mere cover/apparent catalyst for Wall Street to launch a move when they are ready.
So here are some questions about today's price action.
The futures and pre market indications were for a nasty day down, however last night I felt we were at a point in the cycle in whih we would see a rangebound market, which is often near a bottom and a typical accumulation area.
Monday when the S&P broke not only the closing lows of 8/8 and the intraday lows of 8/9 (took out all support) did the market not see follow through selling, when any shorts on the sidelines would have entered the market today on such an obvious technical cue to go short?
Here's a consolidation, not even as bearish as the current bear flag, but around a time period in 2008 that a lot of people are drawing parallels to.
I also wonder why there were so many signals in Sundays post, including a rare Zweig Breadth Thrust which tends to start deent moves of 25% and most bull markets. I showed you the 3 most recent, last week, the 2010 announcement of QE3 and the March, 2009 market bottom.
For a market supposed to fall apart, I found the following hart strange as well...
I also found Monday's positive divergence in the Euro interesting, it should be noted that the Euro changed course and headed higher in morning trade, not in the afternoon when this announcement was made. Watch the timing of these FX charts carefully.
GLD has also acted as a safe haven trade Monday, but showed negative divergences Monday suggesting a move lower on Tuesday, which came to pass, down over 2% Tuesday even after gaining 2 points with the market EOD rally.
Treasuries, another safe haven trade had been showing distribution prior to today, this happens when the market is moving toward a rally.
I had also warned the markets were putting in positive divergences before this story broke
The QQQ put in a vert strong 10 min positive divergence seen here before the EOD rally.
These are all positive signals coming before the FT story.
One thing that would not surprise me is the FT story being used as a catalyst or an excuse for a market that wanted to move higher. With the speed of the HFT firms and Wall Street in general, a short covering rally could have been started by Wall Street. Lets assume Wall Street accumulated 300 million shares of an ETF like the SPY, in a matter of several minutes, they could have easily hit every single offer in the book using 10 million shares, still a drop in the bucket, starting a snowball effect and a short squeeze rally.
As you can see, there is a lot of evidence that asks a lot of questions regarding moves the market made that were significant and before the rally. Had they corresponded with the rally, there wouldn't be these lingering questions and doubts.
Volatility-VXX which trades inversely to the market
I would expect some profit taking by short term traders early tomorrow, but that's just a guess. I think it's also noteworthy to go back and look at Sunday's post and the Demark indicator showing several longer term buy signals, very interesting considering today.
I would still like to see some more divergences to really lock in a long term move, but we'll take the market as we get it. I hope I showed enough charts for you to question this story out of Europe being the catalyst and reason the market moved, if so then maybe I showed you something about the true nature of the market. They should at least be thought provoking.
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