Page menu

Wednesday, November 2, 2022

Market Update 11/2/22 - Can This Rally Continue?

 Can This Rally Continue..?

That's a loaded question, because of course this rally can continue, and especially if the Fed pivots on it's hawkish language, ahead of the election, and with the holidays coming.

Who is going to want to get short... might be the better question.  

Short term we could see a pullback, and indeed we saw a little more weakness, yesterday, ahead of today's FOMC announcement. That makes me think, we could see a relief rally, on today's news, but I would still expect a larger pullback at some point, in the near future.   

As I stated yesterday, the thing to watch is the DOW, because the same folks who engineered that rally, are aggressively shorting tech stocks, and that means that there's an excellent chance that we could see another rotation... out of the DOW, and into the short Tech trade.   

As bearish as I was yesterday, after documenting how the DOW index has been manipulated - and I have plenty more to document on that, in a future blog - I didn't even have time to get into how fake news was being spread throughout social media, in order to manipulate Chinese stocks! 

I suppose CNBC was too busy declaring victory on last months, (now debunked) historic rally on the DOW, to notice the short squeeze in China, but I did see Bloomberg reporting it. 

Now don't scroll down, because you're not interested in China, because there's a lot to be learned by studying the bear market in China, and if you ever hope to sell into the coming US market crash, then it would be smart of you, to start paying attention..!   



One of these headlines doesn't belong here! Can you figure out which one...? 

I don't know what Bloomberg is watching, but investors are not reassessing anything, and Chinese stocks aren't even down this morning!  Edit: Noon Chicago - Chinese stocks are still higher.   

This is as bad as them reporting - before the market open - that US stocks are higher, when they're actually relatively UNCH (unchanged), and I feel sorry for day traders who choose to rely on this kind of coverage!     Edit: Noon Chicago - stocks remain red, ahead of the fed. Hey, that rhymes!

Getting back to yesterday's rumors coming out of China 

Of course they offered no examples of tweets, or screen shots off of Reddit, or any other materials, to back up their claims. Chinese media attempted to squash the reports early on, yet they were smart enough to know, these things tend to gather steam, whether true or not. 


Rumours of an end to China’s zero-Covid policy could send stocks on a roller-coaster ride, analysts say South China Morning Post

Here's another accurate headline from (TheStreet)

Rumor of Chinese Covid Easing Prompts Furious Stock Rally

Ever hear the saying, "Buy the Rumor"? Well this rally in China is a prime example of that!  

Of course that turned out to be based on nothing but internet rumors. The kind we see all the time, during bear markets, although you will usually see this kind of thing dropped, on a short squeeze Friday, heading into Monthly Options expiration. 

As least one of the ladies on Bloomberg Asia, finally reported - yesterday evening - that the Chinese official who was asked to comment on this rumor, wasn't even the person who would know, if it was true or not!  

I have no idea who started the rumor mill, grinding out bullish propaganda in the middle of the night, but I just can't get behind this kind of blatant market manipulation. I'll leave that up to CNBC, and Reddit traders... and of course the algorithmic trading program which buy news like this. 

Speaking of China, and continued market manipulation

This is where the big money was made yesterday - as Chinese stocks rallied 5%. Does this rally have legs? Probably not, since you typically, "buy the rumor, and sell the news".     

Luckily, I was smart enough to not be short China, the most oversold market of all, because this is exactly what you would expect in an oversold market.

The China Trade   

You hear the financial fake news report a lot on, "US traded Chinese stocks", and the ever popular Chinese"Golden Dragon", but not so much on the broader Chinese market, and I suspect that's because these are the things US traders are short.   

Here's a Chinese index you don't hear much about 

$CZH - NYSE China Index - clearly sill in a bear market. Beautiful broadening top pattern, followed by a market crash, that's every bit a scary as what we saw in '08. 


I have to wrap this lengthy update up ASAP!

It's after noon, and the fed reports in less than an hour! 

Getting back to the question I posed at the beginning of this update:

Yes, stocks can go higher into the end of the year, as we've seen so many times before 

I mentioned the possibility of a crash in yesterday's update, but I put that at less than a 10% chance.

Take Care, and be sure to watch those $VIX Levels plummet, on today's fed announcement.  




No comments:

Post a Comment