As I touched on in this weeks news letter, this is a very confused, and complicated market, but one thing is for sure, and that is that the, "bearish capitulation", we've seen as of late, is reminiscent of the short squeezes we saw back in 07 - '08, and especially the most recent leg of this rally, which was propelled by last weeks good CPI report.
Of course the CPI report was only used as an excuse to drive markets higher, as this was on the back of a bullish back-test on the DOW (at the 200 day moving average). Like I said, the banksters know what the number is before it's released, and I have no doubt that information was leaked to the hedge funds.
There's just no other explanation for an immediate 800 point gap up, on a CPI number.
The Dow Index
Of course most traders don't even look at the Dow, so they wouldn't even know that industrial's lead the most recent rally, and if you don't even know what's leading, you have little hope of finding the reversal.
Most traders are bullish tech, and at least tech rallied back somewhat, with a little help from China.
If you caught Friday's update.... then you know that the catalyst for last weeks rally in tech, actually started in China, so in order to time US markets, you really need to chart China as well....
Bear market rallies, are pumped, and dumped, 1 sector at a time, but when the lame stream media doesn't report a stealth rally, then most investors are left in the dark. This seems to be the whole point... to keep the average investor confused, and even I have found myself struggling to read this market.
What's really odd, is that the Dow, which normally lags the rest of the market, would lead a market rally, but this is the sector they (the manipulators) decided to pump. I have a future blog in the works, in which I plan to expose the racketeers, but today we're just going to focus on the chart.
The Charts
$INDU (Dow industrials) - Watching this rigged index for the several reasons I just laid out above
If you've familiarized yourself with the chart legend - linked to a tab at the top of this page - then you already know what the pink line represents.
$SPX - looking at the updated "Morgan Stanley chart" - located in the public charts area - you'll find not only a new black pattern line, but also a key FIB target (Fibonacci retracement), which just happens to line up with 4000, which is the psychological important round number target we're still watching!
Looks like we're not going to have enough time to take out the Morgan Stanley target of 4150, after all. This rally just took too long.....
New York Stock Exchange - Looks like the top of the range
Getting back to the question:
how much longer the market can continue to hold up?
I'd say it could be a week or two, before we see much downside momentum, but who is going to sell during the Thanksgiving holiday? Could be that European hedge funds are planning something like that, and what better time to take profits than while the short sellers are away..?
I think the question of timing all depends on who is behind the recent manipulation, because everything depends on whether or not the Options market has been rigged, and by whom.... will it continue to be rigged (held up), or dumped, after loading up on bearish options bets? I was thinking it was the latter, but that was last week.
It's a tough call, because in theory it would be so easy to run a market up into the end of the 4th quarter, and hold it up, on light holiday trading volume, just as we continue to see, week after week, in Energy markets. I documented that in Thursday's Update, and low-and-behold Energy rallied into another weekly Options Expiration Friday. Didn't I tell you CNBC was only covering for the manipulators, when they reported that Options are only purchased after the market has moved, and not before hand?
Speaking of the worthless lame stream media, Bloomberg is covering Biden's meeting with Xi, while at the same time, not mentioning the fact that the US Congress is rushing to arm Taiwan?!
Another thing not being reported this morning, is the 3% rally in Crypto markets, and that's also for political reasons. A resilient Crypto market doesn't fit the official narrative.
One thing I did hear on Gloomberg this morning, is that if you were invested in the Dow, in British Pounds, then you were actually up 8% for the year. Perhaps that helps explain some of the wacky market behavior?
Things to watch this week
The thing to watch is the $USD, because if we see investors start stampeding back into the safety of the US dollar, that unwind the rally we just saw in equities.
And as I always say: Watch the most manipulated index of all, the $VIX
The $VIX was taken down below the previous low, on that good CPI number, leaving a big gap behind. I really doubt it's going to be allowed to even break out above 26.
Let's assume the market is going to hold up into OPEX this week, because getting paid on your bullish options is the whole point of rigging markets.
Take Care, AA
