I cautioned in yesterday's commentary, with the metals charts, that a short term bottom might be at hand. The sentiment was getting overdone and the usual book talking suspects were spreading gloom and doom with gusto.
Since the end of May the US equity market has been in a downtrend, and selling the rallies has 'worked.'
So, is it time to sell the rally again?
Keep an eye for a breakout attempt. A key level would be 1295 for conservative purposes, but they have to stick a close and follow through. It may take more than one step to do it, to allow for a fakeout to suck more of the bears into an offsides position for the setup.
Then again it could simply fail and go back to retest the low. It is hard to say what will happen when great events are in motion, and the house and a few big players are in collusion.
One can use a number of charts for confirmation of a move by the lead dog, the SP. The dollar has proven to be particularly effective lately in addition to the usual suspects like NDX.
The big TBTF and their funds are batting the US financial markets (and the public) around like their favorite chew toy. Failure to reform the financial system is Obama's single greatest fault, overshadowing even his military adventurism perhaps. I do not think he is 'bad,' but merely weak, lacking in character, and not rising to his call to greatness. A very modern man. He could have stood out well since he is surrounded by amoral puppets and stooges, some in his own house but particularly in the opposition. But he has a fatal attraction of trying to please everyone, and therefore no one, lacking principle and conviction, and therefore remarkable leadership.
I have to chuckle when people send me simple indicators available on public charts, or the comments from people who are obviously talking someone else's book in order to prove some assumption they hold without any underpinning or foundation. I take this a few times, since everyone is entitled to be wrong, and then invoke the spam filters if it become distracting. A small price to pay for the real gems that wash up on the shores from those who have learned to think for themselves, and the genuine souls who struggle on in this troubled world.
It is important when playing for money not to allow distractions to affect your play. You are responsible for what you read and where you spend your time. I learned this lesson some many years ago in a different, more exuberant phase of my gaming career, from Lyle Stuart.
"He names names because he knew everyone. And everyone knew him. In his stories, he relates the occasions when he won big but also admits when the cards were going against him and he left the table a loser. But he always left the table before he lost everything." John Patrick on Lyle StuartIf you cannot maintain the discipline required to trade you should do something else. Most (close to 95%) are not equipped for this, and should ride the long trends as investors, and not worry so much about the daily noise. There is no school for this, you must learn by experience, so you can own your decisions with some understanding and conviction.
In the end the market will teach you humility, and this is a particularly instructive market, being artificially constructed and rife with information assymetry, manipulation of the rules, and deception.
But the trends are resilient, if one has the eyes and the grace to see them.