Buying the election, selling the inauguration

January 9, 2017 09:09 AM

We got there on Friday; no we didn’t. The high for the Dow was 19,999.63. It’s close enough, but it didn’t make it. It will be really interesting to see if it does. Why did it stop at 19,999.63? Do you think it had anything to do with the fact it was 63 calendar days back to the Nov. 4 bottom? Believe me when I tell you it had everything to do with that fact. Friday was also important because it was 144 calendar days back to the Aug. 15 high and 261 calendar days back to the April 20 high.

What does it all mean? One of two things is likely to happen because something important is about to happen because markets don’t line up like this every day. Either we are about to create a super bubble or it needs to drop right here. In a crazy market like this you can’t automatically assume anything; you can’t impose your will on the market. The higher probability should be a pullback.

I’m also watching the Australian market where the 2015 high was at 5996.90 and this is the 97th week.

It’s not my original hypothesis (I borrowed it from someone on television) but I’ve bought into the possibility they bought the election and could be selling the inauguration. If it’s going to happen we have conditions lining up beautifully right here. Now for the first time, on Monday morning with the Congress certifying the Election on Friday, the finish line to all of this is finally in view. The inauguration is actually a week from Friday.

Nearly as exciting, by the time you read this Mercury will have gone direct, which will mean some of the instability we’ve seen in markets over the past few weeks will go away and there is a good chance we go into a trend. Oh yeah, we’ve been in an uptrend but the action has been very uneven.

Since Christmas Day, the NDX had 3 down days, two of them a good size and now four halfway decent bars up. But inside tech, the SOX has been down but the BTK (biotech) has been up. We don’t like seeing that kind of divergence inside technology. Look at the HGX housing index. Do you think this has been a fun pattern to trade? This looks to be the worst element of the Mercury period. Wednesday was a big up day for housing. In my report to clients on Thursday I said I was skeptical.

Then you saw Friday. It’s an evening star in a chart that at the moment is set up to drop and the early indication Monday morning was indeed lower. Look at this pattern since the middle of December, more specifically since the Fed announcement. If there is one arena that could get hurt most by the Fed interest rate guidance, its housing. So Wednesday’s action didn’t make much sense to me. It wouldn’t take a lot for it to blow over. One distribution day right here could blow it out of the water for good. Banking stocks are also vulnerable right here.

Friday was final jobs report of the Barack Obama era. The experts expected 178,000 and they got 156,000. The unemployment rate went up to 4.7% which is actually be credited to Trump. Here’s the strange part. We have a participation rate in the 62.7% handle. Oddly enough, as optimism grows and more people jump back into the labor market by looking for work, the rate will go up. So success for Trump will mean a higher unemployment rate. I know, it sounds insane. Out of these 156,000 jobs, 41,000 jobs were part time.

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About the Author

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.