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Thursday, June 1, 2017

The Perfect Setup - Market update 6/01/2017

The Perfect Setup

You don't hear me talk about catalysts much, because most catalysts are unknown until after a big market move, or a sentiment change. Let's say you see the market crashing, but there's absolutely no apparent  reason for it... but once the market finds support, bad news breaks; this is where most retail investors will sell (at the bottom), but unless there's more bad news coming, that particular news is probably already, fully priced in. This is also the reason why, you have to, "trade the market you see, not the one you want". 

News is priced in, by insiders, within the big banks, and other Washington insiders, and even congress who's allowed to legally trading on inside information. 

This is how the deep state, profits by dishonest gains: Money rules Washington; the same corporate lobbyist who write the law, finance elections, so when regulations are ignored, it should be no surprise, congressional hearings only amount to dog and pony shows.... Minimal fines may be imposed, but nobody goes to jail, because they're all in on it!    

Just yesterday another bank was fined for money laundering, but instead we're supposed to be outraged by the latest political stunt - pulled by Kathy Griffin - or more empty words, from a failed politician - Hillary Clinton. Fake News rules the day.  

Getting back to the fake regulators, and the perfect setup, there's only on reason why energy has lagged the entire Trump rally, and that reason is over-regulation. It also explains why your electric bill has probably tripled over the past 8 years, under Obama, and his buddies overseas. Washington has continued to subsidize losers, like solar, and push nuclear energy, while making things more difficult for oil producers, and all in the name of "Climate Change". This is the gist of the Paris Climate Agreement, as France continues to push it's failed nuclear power agenda. 

Whether Trump pulls out of the Paris Climate Agreement if still unknown, but based on what I'm seeing in the charts, the day's of over-regulation in the energy space has already come to an end, and that sets up for the next massive leg up in the energy rally, which started about the time the election began. Priced in at the end of 2016. This was the short sellers last chance to trash, coal, and energy. 

If there's one chart above all, that illustrates my (above) point, it's the coal chart. 

This washout in the energy sector, was followed by massive short covering, and today, we've seen the energy sector give back 50% of that rally. That's a pullback. 

Short term we've seen Oil rally off the lows, and pullback into wave 2, in a perfect FIB retracement 
of 61.8% (the golden mean), 

DOW Energy sector $DJUSEN - either pulling back into wave B, or 2 in a bullish channel. 

Seeing a similar pullback in the lagging Biotech sector, and many beaten up names in the biotech space are $RUT components.  

It's the perfect setup, for a sector rotation, and higher market highs. 

If the Dow can find support here, and continue to run into July, where MM's will be forced to chase it, it can run to 23500.   

      Identical channel on the $RUT

The perfect setup. 

We may see the market continue to trade in a range for the time being, or even anther shakeout, but there's a good chance yesterday's pullback is all we're going to get, and Trump is supposed to announce his decision on the Paris Climate Accord, as soon as this after-noon. 

I didn't even get into the over-regulation of the auto makers, but Ford $F also looks strong here. 

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Take care, Traders

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