I don't use that phrase as a market cliche or part of the lingo of trading, there really is a message the market sends out.
Lets go back to Tuesday one more time to this post, "More Data" because this is important. What I'm trying to do in this post is help anchor your expectations, I've seen something in the market, combine that with experience, etc and there's a message there for us. This post above is there for one reason and ONE REASON ONLY, TO HELP YOU UNDERSTAND WHAT TO EXPECT, TO KNOW THAT IT'S HOLLOW AND TO NOT FEAR IT, BUT USE IT TO YOUR ADVANTAGE.
Before we go back to what was said on Tuesday in the post linked above, lets just see what the market has done since.
As far as the market, Wednesday was a big day up for the Dow, 175 points or +1.26%, the SPX was up +1.27%, the R2k and NDX were both up over 1%, this was Wednesday.
Now, Tuesday's post, "More Data", I'm going to highlight some parts.
This is just more data that backs up my position that we will almost certainly see a correction/bounce to the upside, the thing is, saying that or hearing that right now sound reasonable and most people feel like, "OK, cool, this will be an opportunity like he's been talking about".
However, Wall St. rarely does anything half-tooshied. When they wanted a low volatility melt up to drag dumb money back into the market with no pullbacks to scare them and a bunch of nightly news headlines, "This is the highest the Dow has been since XYZ0!" they did it and did it well.
When they want to scare people out of positions, they do it and do it well, you'll see a downside move like yesterday that sends longs in to a panic, shorts chased it and likely we'll get an upside move that may indeed make that all-time new high in the Dow that CNBC was talking about yesterday morning just before the market crashed.
The point is, be prepared for an emotional assault that is meant to touch on the two things that move the market, FEAR and GREED.
This is all part of my market Pendulum concept, it swings way too far one way and way too far the other, don't fear it, it truly is a gift/opportunity.
To give you some proof to sustain you, although I doubt you'll recall if we get the kind of move I'd expect, here are a few charts....
I'm trying to prepare you for what I see coming so you can use it to your advantage rather than be afraid of it and many of you did today and yesterday so I'm happy about that.
Today there's a lot of news out there about the Sequester, the vote, this that and the other, but this was all visible in the market Tuesday. Perhaps the market was going to react the way it did no matter what happened, even if the Senate had enough democratic votes, I suspect this is true to some degree.
Futures dropped from the upper VWAP today as the voting started,
but the market told us this an hour before it happened.
Market Update posted at 1:52
Some Early Signs posted at 2:07
We even knew when the market was about to break out and move higher- Market Update-Futures @ 12:27.
This is what I mean about the "Message of the market". Another thing it showed us was that any move higher was pure market manipulation, there was nothing backing it up, therefore it had slim to zero chance of holding, I can show you this in a number of charts, but just think about all the risk assets that didn't move today as CONTEXT hit below -30!
The point in knowing what's happening ahead of time or having a good idea is sing it to your advantage, that's what Wall St. does, that's what we try to do.
Today's selling was ruthless...
Believe me, Wall St. wanted that new Dow record, it would such in so much retail and make their job so much easier, they just didn't get it.
We've already seen some of the move that we started puts for today, tomorrow is a weekly op-ex day so typically there's a floor and roof on the day, it will be interesting though to see what happens, if the weekly op-ex pin is strong enough to hold back sentiment or manipulation.
One other thing, remember when I said "Volatility will pick up, we'll have huge days up and down, but the market will essentially go no where"?
Today the VIX put in a bullish reversal signal, that would be negative for the market.
Not only do we have our custom indicator buy signal, the Bollinger Band squeeze suggesting a highly directional move, the start of that highly directional move, today we have a 2-day bullish candle reversal called a "Bullish Harami" or an inside day, we also have a bullish "Hammer" that printed today in the VIX.
We have soem really serious damage done as well to the averages, beyond what's already there, add this local damage.
So whatever happens moving forward, I have very little fear about selling short in to any price strength "IF" we can even get that, I still think Wall St. wanted that new Dow high, Friday would be a perfect time to get it too, let retail think about it all weekend and place limit orders for Monday morning, that would be a potential bloodbath.
I have nothing though to suggest that will happen, no charts, no evidence, the only thing was the Dow and SPX had dominant Price/Volume relationships that are like a 1-day oversold, "Close Down/Volume Up", the other averages didn't have any dominant relationships.
As far as currencies, they're not looking any better than leading indicators.
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