This market has that kind of a feel to it right now. What kind of feel is that Rev? This kind. Something just isn’t quite right. The scene below is from a resurrected favorite of mine: Wag the Dog. It delves into the man behind the curtain that tickles our synapses that something just doesn’t add up. I feel like our market at the moment isn’t being completely forth-coming, just like Mr. DeNiro and Hoffman. With that said, the cast to this movie was amazing, and also included Anne Heche. My condolences to her family.
Let’s start off by taking a look at /ES. The below is a one year daily chart of /ES. Since breaking out above the top Keltner band during the late-July thrust, /ES has remained above the top Keltner band in a modest parabolic rise. Stochastics have remained pinned in overbought territory, and MACD appears to be rolling over here. My thinking has not changed. I still see this as a counter-trend bounce that will be sold into the election.
Is there any evidence to suggest that we may be topping here, with a subsequent resumption of the downtrend? For starters, we remain in bear market downtrend for 2022. I think that should be respected until proven otherwise. Second, QT is happening not QE. Remember the constant bid that was noticeably felt under this market for most of the past thirteen years? The opposite should be true now. I think the market will struggle to make new highs before QE is relaunched. I trade /ES based off that assumption.
I will also leave you with a look at ARKK. This ETF tracks many of the top tech companies, and has been gutted this year. I touched on this long opportunity in a previous video, noting the POC air gap. The ETF showed some upside during the bounce, but it has now ended as the chart is once again rolling over. If /ES were getting ready to make a run to new all time highs, I would expect this chart to look much different.
To wrap things up on a Thursday night… Courage Mom.
