End of The Quarter Follies

Right through the 20dema, and down we went, as though somebody had pulled the rug out from under. We came close to a test of the 50dma (in this case the exponential, which is a couple of points lower than the simple), which leads me to believe we may hit it tomorrow, but I doubt if we stay there long. there is already signs of selling into strength (a 20 point drop in the last 2 hours sure gives that away), and we may be seeing the bears get primed for another trip down.  The pattern is becoming so predictable that everyone and his brother isgoing to be trading it, which means it won;t last much longer. Whether this breaks up or down is anyone's guess: mine is down.

 

Crude oil got another nice bounce today (stockcharts has restored candlestick charts to WTI, but I guess they update it later. Today's close is on the chart, but not the candle). This is range bound between 75 and 90, and although 75 looks strong, I don;t think this move up is going anywhere near 90. Expect another test of 75 sooner thn a test of 90.

Gold also go a nice bounce after a big reversal day yesterday. I don;t expect this to go a lot higher from here in the near future, but I also don't think it is going lower. This now may be the only "safety" left in the market.

The yield on the 10 year treasury is also getting a big bounce, and this one looks like it might have legs. This has a long way to go to get back to "normal". Mean reversion can be, well, mean when it gets going. I expect we could see some selling by heavily leveraged bond traders coming up. 

This could get ugly for everyone except those holding cash. For them (also known as "the prudent"), this is about the best thing that could happen. The dollar is now firmly in an uptrend, has a bullish pattern here, and with the Fed out of bullets and the euro in collapse, this might be unstoppable.

The long pause after the first leg down in this bear market appears to be coming to an end. The next one may be about to begin, but then again, I thought that last time we did this, so I am going to sit this one out.

I will have the new highs update shortly.