OK, badly constructed, grammatically poor post coming up.
… Just not convinced by the rallies in the ES.
I could be so wrong on so many fronts though.
The recent economic figures haven’t been all that bad (OK, they are bad, but not as bad as they have been).
The commentary out there, while predominantly bearish (it always is) has contained a larger smattering than usual of bullish reasoning (all quite reasonable).
Some of the bearish events/happenings have a silver lining (no, that’s not a comment on silver, just an old expression) … for example, China continues to implement tightening procedures – short-term painful but responsible actions in the bigger picture. Brazil has actually cut rates (link) … yes, in response to perceptions of weakening global growth.
Yes, volume on the rally is low. Breadth is meh. B of A is leading the financials (B of A is leading the financials???? WTF???? Relax, it was sold heavily and with Buffet entering there was bound to be a bounce). And what’s with the downdrafts (near the close yesterday, in the middle of the day today, Wednesday)? I dunno. Look, its a trader’s market (from where I sit), but I would like to have a better handle of developing a reasonable view each day. There is so much weather out there my confusion index is tapping new highs. I had so many tabs open in my browser this morning to revisit that I nearly crashed it (it refused to respond for quite some time on multiple occasions … this has never happened before … hmmm, maybe a new useful market indicator: ‘The Firefox Omen’ LOL).
OK … time to wrap this up.
I think the fear out there, the quite reasonable fears about Europe headlines and ISM reactions etc. is causing some who would otherwise be buying to sit on the sidelines, and encouraging those who would be shorting to go right ahead and do so … so you have a situation where there are buyers waiting to jump on (on dips, an excess of buyers creates some who are going to pull the trigger, just a few more than usual … and on rallies there are shorts to be covered). In short, the internal market dynamics have been supportive of this upmove, quite apart from the ‘potential for QE3’/’the economy really is much better’ reasons that is driving some of the more ‘investment’-type flows.
OK, so its Thursday. There are some important figures out today, and more tomorrow. Then a long weekend in the US. So plenty of time for some more up … BUT … how many of the trading longs are going to take their positions in across the 3-day weekend? The potential for some headline bombs out of Europe, potentially destructive comments from returning US Congressmen, another hurricane gathering off the East Coast of the US …
As I type this the overnight ES is at 1224, just a few points off its very recent highs. Perhaps my fears are unfounded. Perhaps I have adopted the perma-bears attitudes too readily (someone please shoot me!) … but I am going to remain unconvinced by these upmoves.
More to come, I’m going to have to update my view closer to the open (still 10-odd hours away, plenty of time to vacillate LOL).