A bunch of truly weird things are happening in the markets right now, and I’m really not sure what to make of it.
I know I’m supposed to be your all-seeing, all dancing spirit animal… but sometimes things are just opaque.
Consider the stock market first. It’s been on a tear, stopping out all of the bearish setups I’ve posted for the past month. Every.last.one. (which I think is important to acknowledge)
We have a breakout above the critical resistance, setting up a shot at all time highs.
And then… the Fed drops to it’s knees like a Thai hooker and says “no more rate rises”, with predictable effect.
So, at that point we have a breakout above critical resistance.
We have shorts stopped out again.
We have an upward trend day putting bears to the sword.
We have the Fed promising that the Bernanke put, aka the Yellen put, aka the Powell put is still in effect. You’d be CRAY CRAY to bet against all that.
And yet… the market exists to fuck up the greatest number of participants in the most humiliating ways.
Now, it is entirely possible this selling was insiders knowing Mueller was about to finish his report and not wanting to take weekend gap risk. And Teresa May has taken the same approach as my cat to Brexit.
Sit at the door and meow to get out, but when the door is open sit there and do nothing.
Possible, but trying to think your way clear of that ball of cats is going to leave you with a headache.
We have two possible scenarios.
Obviously the downmove on Friday is a little too severe to be “just a retest of the breakout level”.
So that leaves the bearish interpretation which is that the move up is a FALSE BREAKOUT. And we know from the Price Action Masterclass that low probability moves cause big moves.
If this IS a false breakout, its big. Yuge. Since all the sideline bulls who capitulated and got long last week are by definition weak hands, prone to reversing.
Weirdly the yield curve inverted on Friday, stopping out my long term ZN short. I’m not actually sure how to interpret this in context other than I don’t want to be short anymore, so I’m glad to be out.
Viewed overall, this is undeniably weird shit. (technical term). End times, four horsemen of the apocalypse stuff.
I advocate caution. Probably a good time to be on the sidelines, truth be told.
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