Saturday, July 13, 2024

Markets Out Of Sync…

StopSign-Up-SideWays-Down

Looks like we got our up day...  now what?  Well, that's a tough one, as the dollar, oil, gold, and the S&P are "out of sync" now.

Here's what usually happens...

The dollar sells off, gold goes up, oil goes up, and the S&P goes up.  It's not always like that, as oil sometimes doesn't follow the dollar exactly, but it's close.  You see, when the dollar is lower, the exchange rate to and from other currencies will give a net effect of oil companies being more profitable.

Of course gold will go up when the dollar goes down, as it's a hedge against inflation, and a "flight to safety".  All other commodities will also benefit with a weak dollar, but...

Here's the problem...

Oil has been selling off hard lately with about 8-9 down days in a row.  It's due for a bounce, as it's coming into some serious support levels.  This doesn't bod well with the dollar... that is if we want the dollar to continue to rally up.  If oil bounces up, then most likely the dollar will continue to consolidate sideways for a few more days, and then break out big to the upside.

They are at odds with each other, so either the dollar will patiently wait for oil to get a little bounce (while trading sideways for awhile longer), or the dollar will go ahead and break up out of it's consolidation zone, which will put oil down through the support level and onto another support level.

I just don't see that happening with 8-9 days down already with oil.  Now, if it was just oil that was ready for a bounce, then maybe I say that the dollar would rally hard tomorrow, but there's also gold.

It is coming into some major support and should bounce up too.  Both gold and oil are ready for a bounce, which means that the dollar is going to be hard pressed to break out to the upside until both of those two finish their bounce.  I don't see the dollar selling off hard, but instead just a continued sideways to down movement, while everyone gets back in sync together again.

Ok...

So how does this affect the S&P, since the dollar and the market seem to be on opposite sides of the coin?  Well, I think it means that we could continue to chop around here for another day or two.  Yes, it could just stay in this zone of option death until option expiration next week.

That's the worst case scenario, and one I hope doesn't play out as I added to my short position today.   Technically speaking the market is still looking very weak, and should fall 20-30 points (spx) in a quick one or two day period.  But will it?  Or will it just suck the last dime out of the option traders until opx, and then drop the market?

I don't know the answer yet, but I'm short and hoping for some "Sh#t to Hit the Fan" tomorrow or over the weekend, as that might be the only way to get this stupid market to move out of the death zone and into the bear zone.

As for tomorrow, if they cook the retail sales numbers, then expect another day like today.  Remember, volume will be light unless something big in the news happens.  That means that the PPT or whoever can prop up the market for another day.

Bottom line...

Anything can happen as no clear direction can be pinpointed for tomorrow.  Some technicals point down, and others up.  Oil, Gold, S&P, and the Dollar are out of sync.  A big news event (that's bad) should cause a big sell off.  No news, or good news should produce a slight up to flat day, which just keeps the market in the holding pattern a little longer.

So, in this case... we should think back to when we were children and hated to go to school.  What would we do in the winter time if we didn't want to go to class the next day?  Pray for Snow of Course!

Well maybe it's time to Pray for Bad News... if you're short of course?

Red

Red
Author: Red

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Captain_Koons
Captain_Koons
14 years ago

Very good analysis Red. I am net short but I am starting to think we may not get any big moves in the market until after options exp or perhaps January.

However Monday the 14th may be the day. I think it would surprise many people if we had a big down day Monday.

Have a great weekend.

The Captain

Red Dragon Leo
14 years ago
Reply to  Captain_Koons

Thanks Captain…

It seems to have played today while I was gone. I guess I didn't miss much. Let's see… were the Retail Sales good? Well, the “Fake Numbers” were… but I'm sure the real numbers are horrible.

But, you can't beat the crooks at their game, in their casino. You just have too try to figure out their next move, and hop on for the ride.

I'll be trying to do just that next week, and will of course post my thoughts here too.

Red

Red Dragon Leo
14 years ago

Thanks Captain…

It seems to have played today while I was gone. I guess I didn't miss much. Let's see… were the Retail Sales good? Well, the “Fake Numbers” were… but I'm sure the real numbers are horrible.

But, you can't beat the crooks at their game, in their casino. You just have too try to figure out their next move, and hop on for the ride.

I'll be trying to do just that next week, and will of course post my thoughts here too.

Red

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