Around the Globe
- Asia – CLOSED
- Shanghai (China) -0.47%
- Hang Seng (Hong Kong) +0.08%
- Nikkei (Japan)+0.92%
Europe as of 6:36am EDT
- DAX (Germany) +0.40%
- FTSE (UK) +0.54%
Today’s Economic News:
Decent news from Europe. Draghi has already reversed a gap down adding 14 points to the ES since 6:00am ET.
Quote of the day:
He is richest who is content with the least, for content is the wealth of nature.
Current Breadth Readings: (click here to see all our breadth charts)
For today’s breadth chart we will look at why we might be wrong. Since we are bearish from here and we expect that thesis to be tested, we need to look for markers that would cause us to reverse our stance. (Our biggest fear is really intervention and note the Draghi reversal this AM). The strongest chart, in our opinion, for the bulls is the new high / new low ratio chart which is not showing an alarming rush to the bottom. We would like to see that 40 line challenged to confirm a bear call. That has not happened and yesterday we actually saw some building strength. For now we remain bearish.
We are going to throw up one more breadth chart today, the Zweig Breadth Thrust. It, too, turned up yesterday and we will watch that upper trendline carefully now for a sign of gathering bull strength:
ES SP500 Futures Comments:
We are going to cheat here a little, since today is unfolding as we are typing. We eked up our short area just a hair because we want the sell zone as close to 1355 as we can. We like the market failing here between 1350 and 1355. This is our first test of the bear thesis this morning and an excellent example of the enemy of the bears, the interventionalists. Look at those two last 60 minute bars that coincide with with ECB Draghi’s speech this AM. As far as I know, the promises were just more commitments to do something and that triggered a 20+ point run in the ES! Imagine if they do do something!
Our charts all remain bearish and we can not change that for today’s action, we can only sit back and watch the fight and see where the dust has settled on the close. We have some reversal clues marked on our charts along with breadth data to help us gauge how committed the buyers really are. Tonight and tomorrow morning we will decide which side of the fence we are on as we do each day. For today, sell the rips and that target has been and is this 1350 area for a reversal top bounce. Should the bulls take that high ground and go higher we are looking at the 1363 area for the next potential reversal top area.
Our extension lower (our lower low target) remains at 1312 with a double bottom lookout in the 1322 region.
There has been some chatter that Tom and I are on separate pages, that does happen sometimes, not often. Long term we are in 100% agreement and are expecting a strong bullish finish to the year. It is over the next few weeks that we might have some discrepancy and it is not because we don’t see the same things, we do. We have pointed out for a few weeks now how dangerously the market is setting up with a bond bubble, a rallying dollar and weakening momentum. We are at lifetime highs in bonds! We stand on the brink of something quite bearish. Here is where we differ. I am making a pure technical call based on charts and numbers. Tom knows the market dangers here as does a world of people that can make a difference. I have been calling them the interventionalists. In the USA they are called the FED. Europe the ECB. They are more coordinated and organized and powerful than they have ever been before and they have a new team player, China. Combined they can move markets and the Draghi reversal today is a good example, there is nothing technical about that move. Tom expects these powerful angels of the bulls to do their magic, because they have to. That call comes from years of experience and I have to say, if it is right, it will be one of the more spectacular calls I have seen. I hope Tom is right and that these markets ignite and it turns into positive economic momentum. We deserve it.
US Dollar DX Futures Comments:
This is a decent rejection now from a slightly higher high test of the 84 area. We want to watch to see if 83 can now hold.
TLT Twenty Year Bond ETF Comments:
TLT is inching its way to the 135 target area. The co-ordinated intervention might disrupt this trip. We need to see the dust settle from today’s pre-market action.
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