Market Musings

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I was going to do a video, but I decided to just put a few charts together instead.

Even though the Dow was up for the 182nd day in a row today (or whatever the number was; it hardly matters at this point), I actually posted a profit in spite of a heavily bearish portfolio. This is probably because my shorts are very much in the small-caps space, and small caps fell today in spite of a strong Dow and even stronger Transports index.

The bears got a helping hand today by strength in the dollar. If you look at the EUR/USD on a minute bar basis, you'll see a sudden swoon, driven by rumors of an imminent rise in the discount rate. But even though the dollar was quite strong, in the end it didn't budge the S&P. The EUR/USD dropped 85 basis points, whereas the S&P dropped………3! So the strength from the bulls was able to hold up well against a very weak EUR.

On the daily chart below, you can see the pattern being hammered out is very similar to the "Gee It Should Push Higher From This Base" that we saw in the third week of January. Of course, the failure of that base brought in the far-too-short swoon in the market, which tragically terminated on February 5th.


A few days ago, I pointed out the NASDAQ Composite was approaching the underside of two major trendlines. Well, the index isn't exactly cowering in fear at these lines. It has managed to push a tiny bit above each of them. I tend to be a stickler about trendlines, preferring they stay in place as opposed to taking on the properties of rubber that some technicians use. The cold fact of the matter is that these trendlines are both – strictly speaking – violated.


The $NDX is murky as well. The dark green  horizontal line you see is a major Fibonacci retracement level, whereas the diagonals are fan lines dating back many, many years. We are still safely beneath the fan line that served as resistance for the January push higher.


As for precious metals – – I have no meaningful positions right now, but I say again that I don't see how anyone could be bullish about this market. I know all the arguments about fiat currency, trillions of dollars in new paper, a store of value, and all that hoo-ha. But I'm just a simple chartist, and this chart doesn't seem like a compelling buy to me. Indeed, it seems positioned to fall, just as it did back in 2008.


Our old friend the Russell 2000 has both a Slow Stochastic and RSI configuration that is sky-high; I've highlighted a couple prior instances of similar configurations, the first of which didn't amount to jack squat, and the second which preceded a decent tumble. I wouldn't be a buyer at these levels, to be sure.


That's it for me today. We've got one more day of this confounded OPEX week to endure, and although the Econoday calender is utterly blank, and quadruple-witching hour should bring some chaos. I'll see you Friday.