I hope everyone had a great weekend.
From or "Week Ahead" forecast for this week, we expected a bounce, but early on Monday morning, a little bit of a pullback on the cash open to finish the base that was being worked on last week before Yemen news hit.
Futures got a boost when over the weekend a governor for the People's Bank of China hinted that more easing may be coming. Overnight futures got another boost as Shanghai Financial news put out a false rumor that the BoC will be engaging in QE, this was a rumor with no back up based on the weekend governor's statement about more easing may be needed, but it sent the Asian bourses higher and leaked in to Index Futures...
Both chart's 3C signals suggested and may still suggest that the base was going to finish early today before a move higher, but the rumor obviously has interfered.
Typically if there's going to be a correction back to the 3C driven outcome it's going to be on the cash market.
So I'll wait to see what the cash open looks like, but either way it's not much of a difference for most of us as we expect the bounce higher either way and the play is to short the bounce higher, not so much to play the riskier bounce up.
I do think on the cash open we will see some more downside, whether to the lows of last week or not I don't know and I still expect the short term bounce followed by a renewed leg lower.
I'll have a morning update out as soon as I see 3C signals forming.
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