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?
You might be wondering who Rosengren is, but apparently he’s pretty important—that’s Boston Fed President Eric Rosengren I’m talking about. He single-handedly knocked the market out of the box on Friday when he said, “Futures markets are wrong, and the Fed likely should hike rates sooner than implied.”
Is the Fed really getting predictable or am I just getting cynical? Its probably a little of both. It was about a dozen years ago when my wife really started worrying about me. Remember back in the day when CNBC used to show that little clip of the Fed Chair Alan Greenspan walking to his office and they always tuned into his briefcase?
Once again Fed Chair Janet Yellen did her best Alan Greenspan imitation and wouldn’t commit to anything while Vice Chairman Stanley Fischer sounded like he wanted to be sure the stock market doesn’t become too euphoric. The crowd interpreted all this the way they will, but for me nothing has changed. It’s still a case of “good cop, bad cop” and they are leaving all their options on the table.
Want to see something fantastic? If you got this one you had the key to Thursday. This square out symmetry hit very early Thursday morning on the crude oil chart. After all these years, I figured out exactly what this is. What I can tell you is financial markets have overcome a lot of intermediate level time windows to this point, the last of which is 721 weeks up from the 2002 bottom.