The bulls finally did it. Escape velocity was achieved, and the sinewave, after two weeks, was escaped.
The reason? The administration flip-flopping, of course. We went through all this back during the first administration in which “Trade Talks Are Going Well” became nearly a daily joke. Back then, it was about the U.S. and China, but these days, it’s about the on-again, off-again tariffs. The latest volley is that the sweeping tariffs which ostensibly were going to bring in “trillions and trillions of dollars” (without it costing Americans a penny) are going to be narrowed substantially. Thus, the market is celebrating on this particular jerk in the opposite direction.
In turn, volatility, which had been near 30 during all the excitement, has withered away another notch in teen-land, with an 18-handle. (Refer to my For How Long? post which anticipated this).
Thus, we are much closer to a much more plausible reversal point, which should (it had better!!) happen this week. This is the /ES, and the line I’ve drawn is the lowest major resistance point. In other words, it could legitimately be pushed a bit higher.
The small caps are in the same situation, although the prospect bounce could be larger.
As an aside, gold seems to have hammered out a short-term diamond pattern, so I’d expect to see precious metals weak this week.
I am NOT in a great position for this big jump today, being down to 25% cash, and I expect that figure will get goosed higher in short order. I need to learn to be more patient and read my own posts! But I’ll keep my life’s theme song in mind………
