It has been ten weeks since the market bottomed on February 11th. To me, it feels like ten years. It’s been a grueling, awful grind, but it didn’t get really beyond-belief miserable until March 17th, when Yellen went uber-dovish and patterns and trendlines started getting smashed like turkeys being thrown from helicopters.
As I sit here now, the last decent down day we had was back on April 7th, and otherwise the market is just grinding higher and higher, in many cases making highs never seen before in human history. I really thought we were done with all this; that, as I put it, “the wind was at our backs.” Well, the central banks learned their lesson in 2008, and they’re not just going to roll over and let market forces take control. No way, no how.
It’s a good thing I didn’t look at my iPad in the middle of the night, because I would have flipped out. When I went to bed, the ES was down 16 points. At one point during the night session, crude oil and the ES has almost entirely erased their post-Doha losses.
I couldn’t believe the action overnight. When I first saw it, I had to assume that the Doha participants had sent out a press release saying it was all a big misunderstanding, and they, in fact, had a signed deal. But…………no. There was no reason (except, probably, for central bank frantic buying of every asset in sight) for the bounce. Just……………..bizarre.
As you can see, oil almost completely healed its wounds from Qatar.
When I was a boy growing up in Louisiana, our youth group at church had us do an enlightening exercise: we all fasted for a day.
Now, not eating anything for 24 hours isn’t a huge deal. No one is going to die from hunger. But for suburban kids accustomed to eating three meals a day, plus snacks, it’s a big change, and having access to only water quickly gave us a small sliver of empathy about what it would be like to actually not have a choice about being hungry.
When we met at the church the following night, we had all been fasting 24 hours. At that point, the minister picked about six kids at random, had them walk up to the stage, and he gave each of them a McDonald’s bag with a meal inside of it. They joyfully ate their meal, while all the rest of us watched on with true envy. It was the first time I knew what it was like to be jealous of someone who had something to eat when I was hungry. That is a memory that has stuck with me my entire life.
I will now tell you another story from the past to lead in to my general point.
I’ve been online, in one way or another, since about 1982 when I got my first 300 baud Lynx modem. During the many years since, I have acquired what I think is a pretty strong sense as to the rhythm, timbre, and pulse of a given online community. In many ways I’m more comfortable with an online group than with a live group of people.
If I chose to do so, I could spend a lot more time in Slope’s own comments section. I could make a lot of comments on my own, try to guide the conversation, gently scold people whose behavior seemed to be getting a bit out of line, and so forth. I do not spend much time in comments, however, for many reasons. Broadly stated, I’m really busy, and let’s face it, with Slope in its 12th year, I would hope that the community could, by and large, manage itself.
The short term patterns on SPX, NDX and RUT from Tuesday’s Yellen spike broke down and are forming likely bull flags here. I’m expecting to see those go a bit lower today before breaking up to at least test yesterday’s highs. They may reverse at that retest. The ES chart looks supportive of that scenario, though I’m struggling to find another chart to back that up. ES Jun 60min chart (from last night):
Today stunk for me. This chart of the IWM captures the pain nicely:
(As an aside, I’m actually not in any ETFs at all, but I thought the above chart showed the persistence of Tuesday’s lift-off; it’s like the small caps “knew” of Janet’s dovishness before she said a single word).
Many of you know that, for quite a long time, I had a childish tantrum against fellow blogger Northman since, long ago, he managed to hurt my feelings (which, experience has shown, is easier to do than shooting fish in a barrel; I’m a sensitive soul). We buried the hatchet a while ago, and we’ve been having a torrid bromance ever since, staying in constant touch with each other.
Naturally, we’ve been weeping on each other’s shoulders lately, being disappointed time and again at the market’s machinations. Today, when we yet again were being enticed with a red number on the ES, Northy boldly declared to me: