Last Friday and this Monday had an awful lot in common. In each case, the prices absolutely plunged pre-market, and then for no particularly good reason, they rallied monstrously all day long. Apparently Monday’s reason was a bunch of Fed speakers who said interest rates wouldn’t go up anymore. History has shown that the MOST vicious bear markets are when the Fed enters a rate-slashing cycle, so I’m not sure why everyone’s got a woody over this, bu Zerohedge (AKA Goldman Sachs’ mouthpiece) sure is giddy at the prospect of a (ha!) new bull market.
In chart after chart, what I am seeing is, in just two days, a near-completion of a bull trap. Yes, it may have more to go, but it sure seems close. We see that with the All World Index.
As well as the Large Caps.
The Gold Bugs Index is retracing to its neckline.
The S&P 100 is approaching its price gap.
As is the S&P 500.
Overseas, the Tadawul Share Index (Saudi Arabia) has finished a cute little top.
It isn’t a risk-free scenario for the bears, though (is it ever?) I noted last week how the small caps seem to have made a major cyclic bottom. This is a powerful force and gives me pause.
I will also note that my bullish call from last week about the Dow Utilities is continuing to blossom like mad, although we’re more than halfway to my target (which is that lowest Fibonacci level).
Even though Monday was massively disappointing, I didn’t take on to much damage. Reasons being:
- I took quick profits on my SPY and QQQ puts (which would have turned into king-sized losses);
- I had an absurd amount of cash (risk-free);
- I didn’t commit any particularly gigantic screw-ups
So I like to fight another day!
See you pre-market on Tuesday………………
