Greetings from the Columbia River where its 40 degrees cooler than at my house. I’m on vacation but I’m never far from the markets and I have a few thoughts to get you started this week.
First of all, I thought last week would have been better. We came into last week with the Greenback showing us the kind of calculations we normally get at highs. The Dollar extended and consequently, it wasn’t bullish for stocks. It turned out to be a down week with a couple of bright spots. We did try to bounce on Wednesday and as it turned out, we have a new way of analyzing intraday charts that virtually nobody else in the industry is doing. If you want to know what that is, I urge you to check out the Lucas Wave web site. But Friday gave us one of those wash and rinse lows which the media thinks was inspired by Bernanke’s comments. At first, he was blamed for the sour reaction but by the end of the day, markets appeared to like what he said. Personally, I’m finally to the point where I think they need to try something different because they aren’t trying to pull the financial system back from the ledge. There are certain parallels to what the Fed chairman said on Friday and what the Weimar Republic did during the 20’s. Granted, the Weimar Republic had to deal with the Treaty of Versailles and those war reparations. The similarity is how they are starting to use the printing press.
So was the Bernanke’s comments good or bad for the market? Of 2 choices I like to pick the 3rd. As it turns out the BKX broke key supports level last week which I’m a little surprised were breached in August. Nevertheless, the chart turned on the 89th day off the top and when we consider partial bars actually turned up after an 88 day move. As we know the BKX topped a few days before most markets topped on April 26. Monday marks 89 trading days off the April 26th top. It should be bouncing right here. But since the banks topped and bottomed a couple of days early my question in this volume challenged holiday shortened week is whether we are inverting into an 89-90 day spike for the banks. I suppose we’ll know by Tuesday or Wednesday.
Finally, the Dollar spiked higher but has pulled back as anticipated. My concern is I liked my readings much more at the prior high than I do now. So I’m not convinced we have a low in markets in any event. Anytime a market turns within a day or 2 of an 89 day window you have to respect the significance but I need to see more as we don’t normally see market bottoms at the end of August. My normal column will resume right after Labor Day.
Click chart to enlarge
Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.
Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.