The Morning Call
The Market
Technical
It
always happens. I put on a bathing suit
and the Market does something that bears comment. Yesterday technically is called a bearish
outside day---that is, Wednesday’s intraday high was higher than Tuesday’s
intraday high and Wednesday close was below Tuesday’s intraday low. In tech land an outside down day is viewed
negatively. However, this is the age of
QEInfinity and given the recent strength and momentum, this could prove to be a
one or two day phenomena. Further, the
equities were overbought by any definition; so a Market rest is not out of the
question.
Here
is a two day S&P chart that illustrates what an outside down day looks
like:
On the other
hand, the pin action could signify a change in trend; although bear in mind
that tops are generally processes not events.
So even if we are witnessing a change in trend, it will be a while
before we really know it.
Bottom line: at
the moment, this is an interesting development, nothing more; however, it could
build into something meaningful.
Fundamental
Precipitating
the above was investor confusion over the Bernanke testimony and then the
release of the minutes of the last FOMC meeting. Contained within both was the kind of ‘on the
one hand’/’on the other hand’ bulls**t typical of officialdom so that they can
later say that they were correct no matter what happens. That said, investors interpreted the tilt of
the comments toward ‘tapering’ maybe closer than ever. That turned a Market off to a strong start on
the assumption that Bernanke would be dovish into a waterfall formation as
investors began to think that reality may be at hand.
The
Fed minutes as parsed by Bernanke’s bitch Hilsenrath:
Bottom
line: nobody knows what the Fed is going to do.
Indeed I would argue that what they do is irrelevant. What matters is how long investors allow the
Fed to get away with its irresponsible policies before they start refusing to
buy bonds and/or stocks are ever decreasing returns.
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