Not so fast!
While recent gains have been impressive, they have come on the back of a more than 1% pullback in the Dollar and, since stocks are priced in Dollars and earnings are priced in Dollars, that tends to give us a 2:1 move in the indexes so about 2.5% of the last two day's gains have come on the back of the value of EVERYTHING else you own and ALL OF YOUR SAVINGS being diminished by 1.25%.
This is what "THEY" do to manipulate the markets during a sell-off, they push the Dollar higher on any excuse so they can then dunk it to prop up the markets at will. After the Fed failure last week, we desperately needed a boost to avoid a 20% correction so here it is – now we'll see if they can hold the old bounce lines (circa Dec 3rd):
- Dow 36,000 to 34,200 has bounce lines of 34,560 (weak) and 34,920 (strong)
- S&P 4,700 to 4,465 has bounce lines of 4,512 (weak) and 4,559 (strong)
- Nasdaq 16,500 to 15,675 has bounce lines of 15,840 (weak) and 16,005 (strong)
- Russell 2,400 to 2,080 has bounce lines of 2,144 (weak) and 2,208 (strong)
As you can see, the Nasdaq and the Russell are lagging at the moment and the Dow is the most likely to go green on the strong bounce lines but let's watch the S&P's weak bounce line at 4,512 for a clue as to which way things will go. Clearing this bounce zone puts us back to bullish but we do not want to see ANY red in the new bounce zone –…
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