This morning is relatively calm compared to twenty-four hours ago. The big event yesterday was the plunge in crude oil prices whose drop was slightly augmented on the news of an Israel/Iran ceasefire (which, evidently, didn’t even make it through one night). As of crude is down again about another 3%, as it tries to find stability in the mid-60s (HALF the amount the JP Morgan ninnies were screeching about just a few days ago).
The bigger picture is a big deal. We have returned again to the base of the triangle. This triangle teased us terribly a few weeks ago as it looked ready to crack under the pattern before this Iran business got hot. Let’s keep an eye on that base: slip into the low 60s, and there’s a chance for some serious weakness.
Ceasefire or no ceasefire, what little fear was left in the asset markets has left the building, with precious metals plunging. Gold is down around $150 in just over a week’s time.
As I’ve mentioned, however, my heart is with palladium now which is down this morning, yes, but only about 1/4th as much as gold. More importantly, just compared the /PA chart below with the /GC chart over the same timescale above. Looks a lot more robust, wouldn’t you say?
I was stopped out of my IWM position yesterday, and a good thing, too, since we just kept rising. /RTY is driving me bananas, because it has been playing jump-rope with its Fibonacci line for weeks now. Make up your mind!
However, if the /RTY “makes up its mind” in a positive direction, it could be game over for a long while for any surviving equity bears. The small caps have spent nearly four months trying to complete a bullish base, and the closest it came to success was that spike toward the green line it made after the CPI report. We’re rather close to the same green line right now. Simply stated, this pattern MUST fail if the bears are to live.
I am entering the day remarkably light – – a mere 43% of cash (and 0% margin) committed. The /RTY has already lost about 20 points from its overnight peak, so it looks like we’re going to stay on this small cap yo-yo until we all lose our collective minds.
