11/27: Cover your ears and yell "no news is good news!"
We're teetering on the tip of a correction. The market is out of good news. The technicals are beginning to slip from the bulls. I'm starting to think that most retail investors are an unimaginative bunch if they can ignore all these warning bells and still attempt a rally.
Low volume trading has mostly favored the bulls. In fact, buying is so feverish in the future that they usually have to be corrected in the morning. This market floats toward the top, and that means that professional money has to work harder to keep it in line - and it's clearly not up to the task this week - meaning that this ends up going too far and has to be corrected. In what world are the futures supposed to jump up .3% on the "no news is good news" premise? But even that shouldn't be enough as you can see next.
Let's take a look at the news.
In all fairness there was one bit of positive news: Astra Zeneca's Vaccine is ... you already know the number: 90% effective (no surprise, it's already been priced in; in fact, in the study, they said that their original does was far less effective and they discovered the 90% combination by accident - makes me at least a teeny bit concerned). But other than that all the other positive headlines were just about the records the market was setting.
The market is pumping for no good reason. It will soon have to dump.
In the price action, it took a crack at the $365 resistance both in the future and during the day. Both times it was rebuffed. It even began a nice healthy drawdown towards the end of the day, attempting to erase all the gains the futures had secured overnight. An unusually active final hour saved it from a net loss and propelled it back towards a .25% gain for the day.
But all the short-term price action won't solve the fact that the long-term technicals are beginning to turn against this bull run. RSI divergence is slowly beginning to favor the bears in some of the mid-range timeframes. They will take another whack at the $365 line on Monday in what is sure to be a volatile fight over the near-term future of the market. In the absents of news I would say it's likely that we opening way up on Monday, see a drawback, then another run-up mid-day. Beyond that; I don't know who will win.
If you're a fan of the catalyst theory - that is that this market needs a wake-up call in one headline to receive any meaningful negative action- then you might just be proved right next week. The situation will the virus is worsening faster than the vaccines can reach the people who need it. Expect poor employment performances all through the winter, and remember that seasonal workers are still a thing that can influence those numbers unduly to the positive.
Enjoy the weekend. I read the comments, so if you'd like to discuss some theories with me I'm all ears.
This is just some thoughts on the market, not formal advice. Don't rely on my opinions to place your trades.
Low volume trading has mostly favored the bulls. In fact, buying is so feverish in the future that they usually have to be corrected in the morning. This market floats toward the top, and that means that professional money has to work harder to keep it in line - and it's clearly not up to the task this week - meaning that this ends up going too far and has to be corrected. In what world are the futures supposed to jump up .3% on the "no news is good news" premise? But even that shouldn't be enough as you can see next.
Let's take a look at the news.
- U.S. sets record of more than 90,000 COVID-19 patients in hospitals, and health-care workers warn situation is dire
- Walt Disney to lay off 32,000 as virus hits parks.
- The coronavirus is erasing jobs again and raising the specter of a weak November employment report
In all fairness there was one bit of positive news: Astra Zeneca's Vaccine is ... you already know the number: 90% effective (no surprise, it's already been priced in; in fact, in the study, they said that their original does was far less effective and they discovered the 90% combination by accident - makes me at least a teeny bit concerned). But other than that all the other positive headlines were just about the records the market was setting.
The market is pumping for no good reason. It will soon have to dump.
In the price action, it took a crack at the $365 resistance both in the future and during the day. Both times it was rebuffed. It even began a nice healthy drawdown towards the end of the day, attempting to erase all the gains the futures had secured overnight. An unusually active final hour saved it from a net loss and propelled it back towards a .25% gain for the day.
But all the short-term price action won't solve the fact that the long-term technicals are beginning to turn against this bull run. RSI divergence is slowly beginning to favor the bears in some of the mid-range timeframes. They will take another whack at the $365 line on Monday in what is sure to be a volatile fight over the near-term future of the market. In the absents of news I would say it's likely that we opening way up on Monday, see a drawback, then another run-up mid-day. Beyond that; I don't know who will win.
If you're a fan of the catalyst theory - that is that this market needs a wake-up call in one headline to receive any meaningful negative action- then you might just be proved right next week. The situation will the virus is worsening faster than the vaccines can reach the people who need it. Expect poor employment performances all through the winter, and remember that seasonal workers are still a thing that can influence those numbers unduly to the positive.
Enjoy the weekend. I read the comments, so if you'd like to discuss some theories with me I'm all ears.
This is just some thoughts on the market, not formal advice. Don't rely on my opinions to place your trades.