The USA and Canadian equity markets probably surprised many participants both professional and amateur today, given the highly unusual U-Turn in market direction late in the day.
After a sharp early morning sell-off in indices like the SP500 and Dow Jones, which many attributed either to nervousness regarding the events in the Korean Peninsula, or the overnight strength of the USA dollar, all of a sudden, with about an hour and half of trading left in the session, the market rallied sharply to close little changed.
Frankly, other than a few rare large man-made events such as QE2, it is usually a complete waste of time for an investor or trader to try and explain-away or justify all of the market gyrations. Again, this only adds to the financial noise factor, and a source of distraction and financial confusion. Analysis of the so-called news or media spin-of-the-day does noting to add profit to your account.
That stated and just for fun, my own personal interpretation of the sudden U-turn event today, relates to some suspicious jiggery-pokery being carried out. It could be the PPT, or even some large hedge funds whom are engaged in month-end window dressing. It is noteworthy that tomorrow is month end.
Essentially, stated slightly different, someone with deep pockets does not want the market to go down right now - near month end. This begs the question; what will December bring?
So as to the very-short term trend - "considerable emphasis on very short" - this could potentially fake-out market participants into becoming overly bullish. In my analysis, this is the exact move jiggery-poker is being staged for.
Far more scientific and intelligent is applying a little technical analysis and statistical theory, to rare inter-day U-Turns such as that witnessed. Usually, these are indicative of a short-term bottom. This means tomorrow could see some early equity strength in the morning, or even for a few short days.
A better way to look at current SP-500 index in my opinion as example, is to consider the significant price overlap that we have been discussing lately in recent trading sessions. The market is thus in an overall holding pattern waiting for the cycle to expire.
Remember the great W.D. Gann and too many others to list have taught that TIME (and thus cycles) are the MASTER CONTROL FACTOR.
Add to that, the bigger picture indicators on the weekly charts, as I have been discussing lately, and it should provide ample evidence to keep any bullish horns hidden in your closet for now, unless you are a very good trader and using stops.
Overall, the equity market has entered a final period of a very large distributed top, after a near two year run-up, whereby smart money is now selling to weaker or less sophisticated hands. As we have already stated by hinting at cycles and time, this should continue until Q1 of 2011.
In short, today's missive regarding the current trend forecast, still suggests ignoring the jiggery-poker rules, as at least in my view there are far too many other indicators which still suggest that the trend will resume a southerly direction in an overall Wave C in the current Elliott Wave Four down trend.
This too suggests that traders and investors prepare for a coming wild ride.
Further, hinting at KRTT's more sophisticated short-term cycles applications that we normally do not disclose here, they too also suggests that over the very short term, we may have to wait until about December 03, 2010 for the fireworks to really begin to heat up.
Go back and review the coming Fibonacci event post that was done a while back.
In conclusion, the only valuable financial truth is in following the trend.
It is only the trend that makes a profit by going with it, or in creating a loss if you fail to understand the true market direction. This is why technical analysis software, placed in the hands of a well trained analyst is invaluable.
Technical analysis trend determination, is essentially the one weapon that will cut through all of the chaos and jiggery-poker, being frequently played by Wall Street, Bay Street and global magnates.
So having reiterated the golden trend following rule here on this blog a hundred times or so, we need to consider the charts in detail.
As usual, I have placed mark-up educational comments on the two exhibits below. Don't be fooled by those whom play jiggery-poker, hoping to gain control over your money.
The wise trading maxim regarding risk of: "if in doubt - get out" seems quite appropriate at present, especially for anyone who is at all conservative minded, or less than a highly experienced trader, and one who has the discipline to use rigid stops.
Spot the trend and go with it.
Sincerely,
James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
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