Amazing what you can see and discern in market behaviour.
Yesterday I posted that the market was not short (please excuse the shorthand, of course some participants are/were short, me saying ‘the market is not short’ is just a bit of jargon, a bit vague and imprecise but hopefully you know what I mean) and that therefore there was a reduction in buying potential (very little short covering to be done). Shorts had actually been reducing over the past few days. It started on Friday … quite a sensible move when you think about it, the market was seemingly waiting on a resolution of the debt ceiling impasse, if one came over the weekend there may well have been a rally on Monday leaving shorts rueful. Few shorts established again on Monday, and then my comments after there was again a no-show from the shorts on Tuesday. And so we got a slide as the number of potential buyers was reduced. Catalyst seems to be the resumption of European woes.
So now we move on, some new assessment to be done through today in order to come up with a cogent view for Thursday’s session.