Now things are starting to get interesting! A day like Tuesday was almost too easy; not that I'm begging for a challenge or anything. It's been challenging enough being bearish (until recently). But the economic reports that come out Thursday and Friday should help give the market an impetus one way or another.
The reason for the subject of this entry is that bear markets feed off of disappointment. The bulls want a savior – – a white knight – – and what we bears want is for the bulls to embrace that white knight and realize (quickly) that it doesn't make any difference. The latest example (and it's a huge one) was the Monday bailout. The thrill from the largest government intervention in human history last all of one – count 'em, one – trading day. (One a vast smaller scale, the thrill of the LEH strategy, which caused a flood of exciting buying this morning, fizzled away into nothing; after-hours, LEH is plunging to prices now seen since 1998).
I'm really focused on the big ETFs right now, since they yield the best clues as to future direction. Their obedience to the Fibonacci retracements has been amazing. Look at the low on the DIA today, perfectly touching the short-term retracement. From a candlestick viewpoint, this indicates real indecision (but we all knew that already!)
The same can be said of the SPY; the market is struggling with what to do next. Today's lows got very near the lows witnessed last week (without breaking beneath).
The IWM was especially interesting, since it is trading below a major and important retracement level; the candlestick of today closely resembles that of last Friday. The tug of war between bulls and bears is getting fierce.
Looking at a much longer time frame, you can see why I am so bearish. There is still ample room to fall, even if major support is not broken. On the Russell 2000 alone, there are nearly 200 points between current levels and major support.
Not to make the $UTIL an every day chart, but here it is again in all its glory. I am going to use this as an important tool in deciding when the bear market is finished (at least medium-term).
For goodness sake, the EUR/USD is still due for a bounce. If it firms up, I'm looking for it to head back to that tinted zone, around 1.43; in turn, oil and gold should rise.
I did buy ten different calls today, all energy- and gold-related. My view is that the $XAU (which finallly moved up today!) will head back to the mid- to high-130s before plunging anew.
Having said that, there are a number of issues which seem to have experienced fundamental breakdowns and, in spite of today's strength, seem to simply be setting up for another fall (already). Here are a couple of examples.
Remember when I used to do just five posts in an entire week? This blog has become a bit out of control, and I'm doing more like 40 a week now! Yowie, I really need to get my life back.
