In my report to clients on Tuesday night many stocks seemed to have turned the corner from the recent sandwich pullback and I said it could be the start of the Santa rally. I’m not a rocket scientist. I merely asked myself a simple question. If not now, then when?
It was a short week but the takeaway is that every one of the time windows and cycle points were violated. I haven’t seen a situation like that on the daily timeframe in a long time. Even in China, which had the most bearish possible setup of all, we had violation.
A lot of cycle points to look at today. Last week the markets survived 377 trading days from the S&P 500 May 2015 high. In the very near term, futures charts survived 161 hours up from the election low. The E-mini S&P 500 hit a new high 1,444 hours from the prior high in August and it has slightly backed off. The last one to report to you is the overall market is 720 hours from the Brexit low mid session Monday.
The election is over, aren’t you glad? Honestly, it was more stressful than I can ever remember for an Election Day. I am going to leave political views entirely on the curb. But we must talk about last Tuesday evening.
I woke up from my Sunday afternoon siesta to see that markets gapped up after learning FBI Director Comey backed off the Clinton investigation. The country is divided, Washington is a mess, day-after-day of WikiLeaks revelations, layers of scandal on top of scandal, ect.
So it was another week, another attempt lower for the bears. What was the justification? In the Nasdaq it was 60 weeks up off its August 2015 low. For the rest, there was a lesser pivot to end the rally early last November and a lot of these names turned in a 233-day window.
The jobs number came in light at 156,000. This benefits the incumbent party because the number wasn’t good enough to invoke interest rate hike fears. It wasn’t bad enough for the market to tank. But all the other factors are still out there, including Deutsche Bank and now the rhetoric concerning a conflict with Russia is heating up.
Financials markets may have found their black swan and it had nothing to do with Donald Trump, Hillary Clinton or any of the usual controversies we’ve speculated on over the months. No, the Germans may have their own Lehman moment coming just around the corner with Deutsche Bank. A zerohedge.com story says Merkel cannot politically afford to bail out the troubled bank.
They chickened out; I knew they would. You need to understand how predictable the Fed is because they’ve been playing this same game for months now. It’s good cop/bad cop with the various Fed chieftains making various speeches about how they need to raise rates at the next meeting. Then they never do, do they?