Last week I showed you the incredible square out on the DAX for the Brexit high. Late Monday many charts formed a new square out low, which propelled markets back up. Probably the best example I have for you is the S&P 500, which turned back up at the 1991 handle in 91 hours for the move.
While the UK and the rest of the world was trying to figure out who really won the vote on Thursday night, I can tell you beyond a shadow of a doubt the real winner was WD Gann. Oh yeah, I wouldn’t kid you about something like this.
Wednesday became a day that sold on the announcement but settled in flat as I think traders weren’t so concerned as to what the Fed might do as much as they were looking for some bravado after the recent comments they’d raise rates soon.
I’m not concerned about a seasonal tendency like a Santa rally. I’m concerned for the aftermath. In normal years there is a holiday euphoria that went missing for the most part this year. While the week directly after Christmas is usually bullish it can be diminished as the euphoria has passed but as I said there wasn’t much euphoria to speak of this year.
It certainly isn’t easy coming here week after week warning people the market can hit a wall at any time while seeing it go up day after day. While I haven’t urged you to be short, I have basically told people to trade this market with one eye in the back of the head.
If I am concerned about anything it is the U.S. dollar, which is threatening to fall apart. As you can see on the chart below, recent action shows an inability to get above that recent gigantic red power bar in the leg off the 616 hour low. It failed, came to the inflection line you see which is the beginning of the real candle body for the red bar. It came down to it, held support and started breaking down. It's not terminal yet but if they bounce it and it fails at that line it will be see ya in the next lifetime.