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The World Market Index will need to recapture the 200-day moving average, as well as the 1900 level, as shown on the following Daily chart. Since it’s still under the bearish influences of a moving average Death Cross formation, it’s still vulnerable to a retest of the 50-day moving average, or lower, should we see major world markets plunge…a drop and hold below the 50 level on the RSI could point price in that direction.
The ability of the media to weave together news and the markets has a strange inverted genius to it. If ES has risen strongly on the decent NFP number this morning then the explanation would have been that the market was responding to the increasing strength of the US economy. As ES has fallen instead the explanation will be that the increasing strength of the US economy is making further QE less likely and bringing forward the prospect of increasing interest rates. We should never underestimate the power of a good rationalization:
Personally I wonder whether the news was actually important here at all, as a retest of Wednesday’s low was always a strong possibility. The bear scenario requires it to complete and test the H&S targeting the 2055 area on a break below Wednesday’s lows. The bulls need it to set up a double bottom that would target a retest of the all time high on a break over yesterday’s highs. SPX 5min chart:
The jobs report came out this morning, and I am surrounded by a sea of deliciously red digits. The Euro, shown below, continues to get utterly obliterated (cough cough Slope+ readers cough cough) and it seems a foregone conclusion, with jobs surging and the unemployment rate low again, that this little zero interest rate party is only months away from a permanent cessation.
In case you missed this subtle little character point, I really like shorting stuff. What breaks my heart is that I didn’t short the Euro and just stick with it for the past year. I was watching the triangle below for a long time, but when it broke beneath the triangle, I talked myself out of the trade since it had already gone down so far. Well, umm, it didn’t really matter, did it? Because when you’re dealing with monster-huge patterns, the power behind them can make the moves already in place to be immaterial. Try to remember this, and I’ll do the same.
