"Talk about an easily swayed public.
I always think back to the October lows when EVERYONE was bearish as could be which was the reason I expected a strong rally before we even had any 3C evidence of a base which came soon after, that was at least a substantial move, but what is being talked about above is kind of silly when you consider what has actually happened...
The point is not what will happen , the point is what has happened and how a day can change traders outlooks so dramatically, that's just chasing price, how can there be any conviction there?
I just thought I'd mention it as the market is moved by emotion/perception, those are the engines behind supply/demand dynamics (and of course the occasional central bank interference).
What I really wanted to talk about was USO and a post from last Thursday as we were looking for the USO bounce and short squeeze higher, USO Update & Effects. Notice it's not just the usual USO Update, but "& Effects" and those effects have a direct impact on the broader market right now, here's what they were from the post linked above (last week) which so far has been dead on, including a market forecast with the QQQ as an example (charts below)...
From last Thursday, USO Update & Effects...
"First we'll take a quick look at USO's charts, I still like this one for a bounce that likely turns short squeeze, which means we may have to consider some other possibilities related to such a potential outcome.
Remember, based on these charts that have a positive divegrence out to about 30 minutes, I think we get a surprising bounce in crude, it would seem likely to trigger a short squeeze, but I do not see it in any way as a primary trend reversal (for all the bottom callers), more what I'd call a counter trend rally/bounce.
However, even though I don't see much in the Energy (XLE) charts that excites me, it would stand to reason that some of the badly beaten down energy names would trigger a short squeeze, we saw that earlier in the week, I believe Monday as Energy led the 9 S&P sectors and we had a strong short squeeze in Energy stocks, this could of course effect the broader market. I can't say specifically it did on Monday as the Russell 2000 was already forecasted to lead the averages as of Friday's Week Ahead post and the other averages were rather flat, but it is something to consider.
Also worthy of consideration, even though it is early as we have a couple of hours left, the forecast for an oversold bounce from last night (afternoon strength to develop)...
Just don't forget what those HYG charts looked like, that should give you some ideas of how you can use this as a set up for several different positions whether a piggy back short term long or letting the short trade come to you."
While I included some of the broad market in the QQQ chart itself, this is more because of the HYG charts even last week and the ability to use the entire post from USO to USO's effects on the entire Energy Sector which is a large component of the market averages and how that would effect the broad market.
In other words, "Toe bone connected to the foot bone; foot bone connected to the heel bone' heel bone connected to the ankle bone..."
Few things in the market are an island unto themselves... Today's +5.37% gain in USO (and nearly +18% over the last 3-days), has also moved as was warned and expected, The Energy Sector. In fact in looking at the internals and breadth of the market yesterday in the Daily Wrap, 9 of 9 S&P sectors closed green, the leader at +3.06% was the Energy Sector. Today 9 of 9 S&P sectors closed in the green, the leader... The Energy Sector +2.74%.
Last week's warning about what a USO rally would do or effect is one of those lessons that I think is worth taking to heart, since most of what we do is multiple asset and timeframe analysis.
That one wasn't hard to see coming...
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