SPX from the top - Gap closed at 38% retrace.
Don't think we can say much till 2:15 when Ben speaks. So far the election results appear to have been very accurately priced in. Not to hot, not to cold, just right to not elicit any market reaction. That leaves the question as to how was QEII priced in?
Markets are in a precarious spot with April highs just above in most indexes. Overbought falling out of a busted wedge for the second time. Will we have to lower the wedge support diagonal once more to placate the bulls thirst for more upside? If new highs are set that must be considered. In that case this multi-week rectangle may make for a measured move up (continuing the pattern over the past couple of months).
Downside potential is evident. We all know the troubles that exist. No need in beating that horse to death. We all know that technically the markets are growing more overbought every day and have been stretched to if not beyond normal limits.
What's different (than in a normal market) is that the markets are controlled and fraud is rampant. They are controlling markets via FX intervention, intervention or a variety of other methods. They seem to be able to manage disasters like fraudclosuregate or insolvency every time they arise. This string of luck will run out. When it does the markets will collapse. Till then we must remain patient and follow their lead. Any other strategy has been futile.
At 2:15 the markets will tell us what to do. I have been in the pop then drop camp. Was the pop yesterday? Is the 1200 resistance area too much for even the Fed to capture? Will the euphoria of Barry losing total control be enough to rally the markets? Will the new congress finally put the patient in the operating room and open it up and begin to actually fix something (which will cause enormous pain)? Will the Fed surprise on QEII announcement? All big questions. Bottom line is that until the Fed and Treasury loses control, we are playing their game.
GL!
