Closing Update

I'll include some charts right after this, but whatever happened this morning, whether Bill Gross's comments, "Bad news is good news is bad news" on the macro economic data front this morning or pricing in new ECB/QE information that is less than the exciting QE the market has already gone ahead and priced in according to GS and JPM, months ago which means short of doing something bigger than what the market has priced in, the risks are to the downside on disappointment, personally I think that's what we saw today on the ECB's option #3.

Our bounce looks alive and well which brings me to another possibility, although I'm doubtful of it, a leak of tomorrow's 2 p.m. F_O_M_C minutes from the last meeting. Don't scoff, it wasn't too long ago the F_E_D was caught red handed sending the minutes out about a day and a half early to some 154 large funds/Private Equity via email. There are so many things wrong with this event that you can't say it was an accident. First the market is suppose to receive the same information at the same time, anything other than that is usually frowned upon as insider trading. So why would the F_E_D send out emails to tell people what the minutes said when clearly the fastest way for everyone to receive them at the same time is a mass release on their website? I'd like to know how to get on that mailing list. And of the 154 firms that received the minutes early, not a single one sent a message saying, "Uh... excuse me, but I think you made a mistake, these aren't due out until Wednesday", not one.

So while I tend to doubt that is what was behind this morning's move, it's not like the scenario of a leak is without precedent.

On that note, as always, BEWARE THE F_E_D KNEE JERK REACTION, it's almost always wrong as we have seen today as nearly all of the averages have retraced all of the gains since the December 17th (2 p.m.) knee jerk reaction. ON A DEC. 17TH CLOSING BASIS, THE MAJOR AVERAGES HAVE RETRACED ALL OF THE F_O_M_C GAINS AND THEN SOME.

The point is as always, the knee jerk move, which the market seems to be primed to set up as "UP" based on the recent positive divergences, is almost always retraced within 2-3 days. The last one took a bit longer, but consider our scenario before the F_O_M_C which included the Santa Claus Rally initially looking strong to pull in longs and then slamming the door which happened yesterday with the worst Santa Rally since 1999, EXACTLY WHAT WE FORECAST which was based on mass psychology or thinking like a criminal which are concepts that have all come from objective evidence of charts over the years.

I personally would rather short in to price strength and keep my trades on the same side as probabilities, but I know some of you are short term traders and if not already long are going long for the bounce we expect. I'll be looking for the pivot, the moment in which it looks to fail and that's where I'd want to open positions like FAZ (3x short Financials) or add to them if I had the room or 3x leveraged market shorts like SQQQ, SRTY, SPXU, maybe NASDAQ Biotechs short (BIS), there should be more opportunities than you can shake a stick at so that's my approach, but I'll keep you day traders up to date as best I can.

I see no reason at this point with the charts from late last week and early this week along with what happened in to today's lows, that we shouldn't expect a market bounce.

If, there's some leak in the minutes as we have caught about 3 F_O_M_C leaks over the years, which isn't a lot, but they were very obvious; I'll let you know as in that scenario, things may change a lot faster than you expect.

Generally speaking though, just like the last F_O_M_C, price is setting the tone and interpretation of the data initially, the knee jerk, so if we already have positives lined up, unless there's something about a rate hike at the next meeting, I'd expect price to set the tone so long as the minutes don't have any big surprises. From there, it's just about looking for the near term positives to turn negative and to enter our positions.

As I said, I'll include charts, but don't forget, tomorrow at 2 p.m. and I'll be watching closely in to the event for any leaks.