Posted 2007-05-16 16:44
by Karl Denninger
by Karl Denninger
That was amusing.
Two days of indecision and below the wedge, now closing back into it - but not above. Today was a potential judgement day, but judgement was denied. The Nasdaq was interesting today as well; here 'ya go:
Heh, that's what other channel there at the right side? Hmmmmm... Yes, that really is what it looks like - a trading channel that appears to be getting established, and guess which way it points?
Is that all? Uh, no. Here's the Russell
Heh, same channel, same slope! WHAT?!
So now we have two indices that say "heh, wait a second!" while the Dow continues to power on to higher and higher levels.
The DOW, by the way, violated the channel today to the topside.
So now we have a true dichotomy here. We have the DOW breaking the channel to the topside, we have the S&P that is about to get sphinctered out of its channel, and we have the Russell and Nasdaq saying not so fast buddy.
Now here's the problem - the Nasdaq is still posting a SELL on all measures EXCEPT Stochastics and so is the Russell 2000. But the S&P and DOw say otherwise.
So who do you believe here?
Well, in the broader market, one of the two has to win eventually. While the Russell and Nasdaq can underperform the S&P and Dow, for them to have a solid SELL (which for aggressive investors could be interpreted as a "Short" signal) while the other two indices are posting "HOLD LONGs" (the S&P) or "BUY" (DOW) simply cannot hold for long at all.
One of these two views is correct. The 10 year bond appears to be signalling that the Russell and Nasdaq are right by moving lower in price (higher in rates, which means real interest rates are going up), but again, is this an artifact of the market's rise or something else?
We shall see. For the time being if you're long the S&P500 or DOW, enjoy it. If you're long the Nas, you got your signal yesterday. Unless that signal reverses (and despite the rise today, it did not) there's no good read on what's up. The Russell 2000 remains on a Sell going back nearly a week now.
In short this is a high risk scenario for both sides. If you're playing long, be nimble and be ready, and I hope you're doing it on the DOW. If you're playing short, I hope you're doing it on the Nasdaq, because if you're shorting the DOW here, you're getting killed.
More if I see anything interesting overnight.....
Two days of indecision and below the wedge, now closing back into it - but not above. Today was a potential judgement day, but judgement was denied. The Nasdaq was interesting today as well; here 'ya go:
Heh, that's what other channel there at the right side? Hmmmmm... Yes, that really is what it looks like - a trading channel that appears to be getting established, and guess which way it points?
Is that all? Uh, no. Here's the Russell
Heh, same channel, same slope! WHAT?!
So now we have two indices that say "heh, wait a second!" while the Dow continues to power on to higher and higher levels.
The DOW, by the way, violated the channel today to the topside.
So now we have a true dichotomy here. We have the DOW breaking the channel to the topside, we have the S&P that is about to get sphinctered out of its channel, and we have the Russell and Nasdaq saying not so fast buddy.
Now here's the problem - the Nasdaq is still posting a SELL on all measures EXCEPT Stochastics and so is the Russell 2000. But the S&P and DOw say otherwise.
So who do you believe here?
Well, in the broader market, one of the two has to win eventually. While the Russell and Nasdaq can underperform the S&P and Dow, for them to have a solid SELL (which for aggressive investors could be interpreted as a "Short" signal) while the other two indices are posting "HOLD LONGs" (the S&P) or "BUY" (DOW) simply cannot hold for long at all.
One of these two views is correct. The 10 year bond appears to be signalling that the Russell and Nasdaq are right by moving lower in price (higher in rates, which means real interest rates are going up), but again, is this an artifact of the market's rise or something else?
We shall see. For the time being if you're long the S&P500 or DOW, enjoy it. If you're long the Nas, you got your signal yesterday. Unless that signal reverses (and despite the rise today, it did not) there's no good read on what's up. The Russell 2000 remains on a Sell going back nearly a week now.
In short this is a high risk scenario for both sides. If you're playing long, be nimble and be ready, and I hope you're doing it on the DOW. If you're playing short, I hope you're doing it on the Nasdaq, because if you're shorting the DOW here, you're getting killed.
More if I see anything interesting overnight.....
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