Bernanke Speaks And The Markets Sell Off…


Oh NO!  What Did I Say Wrong?

You gotta love it!  Just as soon as Ben Bernankes' FOMC minutes are released, the market tanks.  Of course from a technical point of view, it was ready to sell off anyway... but someone has to be blamed, right?  LOL.  Well, tomorrow should also be a down day too, as the 60 minute chart has now rolled over and is ready to cross the zero level.

The daily chart put in a lower histogram tower, and the MACD lines are getting closer to crossing back down again.  The weekly is now sitting with a topping tail on its' candle, but of course the week hasn't ended yet... so that could all change.

The 15 minute chart is oversold and pointing slightly back up, but the 5 minute is over bought... meaning that any move back up will be short lived, as both charts re-align themselves to point back down at the same time.  With the 60 minute chart putting downward pressure, I can't really see the 15 minute chart pushing the market back up very far.

The sideways action for the last couple of hours put in a bear flag on the 5 and 15 minute charts.  While it's possible that we go up a little, allowing the 15 to work off its' oversold condition, we could just as easily continue to fall lower while it does it.

Overall, we are still in the falling channel, and until we get outside it... I'm bearish.  I was short term bullish last week, but today turned me to short term bearish.  I'm not sure how far we will sell off too, but we should see some more downside for at least tomorrow morning.



          • All our shorts are gonna get pounded today.
            A few earnings that are due to major cost cutting and the futures go nuts.

          • I gave Tony the nickname “Mr. Bear Porn” because his charts and bias were so bearish for so long.

            The reason we're going to break through the trendline this time has to do with Europe's “stress testing” of their banks. What happened when we did that to ours? Markets went up. Why? Gov't was putting their “stamp” on the capital ratios, etc. Don't trade reality (except when you should). Trade sentiment (except when you shouldn't).

          • Sorry 🙂 I was short via FAZ when Tim Geithner released the “stress test” results for US banks last year. I got my ass handed to me. So, the lesson learned is that you want to be long “stupid” (ideally, a European financial sector fund, i.e. fundamentally unsound, i.e. “stupid”) when bank stress-test results are released.

            CAC and FTSE ramped up in anticipation of the banks being given a clean bill of health. (extend and pretend). However — one thing that happened as a result of our stress test is that some big banks sold assets to raise capital. Some allocated more capital against future loan losses. Some recapitalized by selling more shares. So, as part of the process of “passing” the stress test, the banks agreed to do fundamentally sound things that they should have been doing all along.

            The assumption is that the European banks are undergoing the same process. When the banks “pass”, their stocks are going to go up up up in Europe. What they'll do (just like our banks did last summer) is offer more shares at these new higher prices. The stocks will (counter-intuitively) go even higher because this is good news (i.e. they're acting responsibly) even though mathematically it is a share dilution. There will be a shortable pop, but I'm not gonna go there.

            Short term: stupid bullish. We have broken above the trend line, and I'm pretty sure we're gonna close above it. Short-covering-palooza will follow.

            If this crosses over the trend has changed:


            I got long DRN yesterday. That's our own version of “stupid” (3x commercial real estate). We're trading in Bizarro world.

  1. Ell our shorts are gonna get pounded today.
    A few earnings that are due to major cost cutting and the futures go nuts.

  2. Jobless claims jumped sharply and market flies because they are unemployed.

    earnings are due to layoffs.

  3. The daily chart turned back up with today's move, so we could also be heading to 112.41 (the other FP), but not today of course. Tomorrow or next week seems more likely at this point.

  4. look at the comments over the last week===the markets going up, no the market is going down, no the marketis… charts are not working well, reminds me of mid 09. call it what you want but there is no rational to the moves, vix is bottom at support, when the market shows where it is headed we will get a big move. 1500 points or more in a hurry, who thinks we are going to 11800? I do not. Staying short untill Aug expiration. Good luck trading,

    • Yes Jack,

      I agree with you. I've changed my outlook from bearish to bullish almost daily now. The charts are worthless sometimes it seems. This is one of those times.

      Everything I seen pointed down today, yet the market rallied hard? Even the news out was bad… talk about manipulation! There is no question in my mind that this was another short squeeze.

      Will it continue higher tomorrow? I don't know at this point? We'll just have to look for the FP after the close today, as that's about the only thing accurate at this point.

  5. We hit the first fake print of 109.79 spy… now what? Do we keep on rallying to the 112.41 print, and have a 50 point rally like Anthony Allen called for… or save that for another day? (I got to hand it to him on calling that call correctly… I never expected such a powerful rally today).

  6. Iam amazed that they have been able to keep this up this long today.

    looks like the 5 minute charts are turning up again, while 15 minutes is still strong bull.

  7. The vix is less than65 so this is not supported by big buy volume. anyone have a better handle on this am volume?

  8. This is going to the moon folks.

    Cannot even move long without chasing. so will be out of market in a bit.

  9. You can bet this is shaking out a bunch of fence line shorts today. If i had brassier balls I would buy into the shorts on this but the swing has me looking past 1100,

      • Thanks Jim,
        bull flag, thanks…I wasn't sure what you called the pattern. I just knew it was bull &%#4%, something. I'm going to find something to short now.

        • Iam not sure that actually qualifies as a bull flag pattern due to the shape of the pole, not having the upward or verticle positive close stick.???

          Someone better than I would have to make that call.

          Regardless it may be playing out as a bull flag as of today.

  10. It's look's like we'll go higher again tomorrow I guess. We should backtest the falling channel trendline (around 1080), that we finally busted out of today… but there's no guarantee on that. We could continue much higher tomorrow?

  11. Hey Mr. Troll… Flagging a comment that Anna made is useless. She's a personal friend and will never be banned! What an idiot you must be… don't you know that the moderators get an email to approve/remove all comments that are flagged?

    I'm the site owner (and of course a moderator), and Anna is a moderator too. You guys are clueless sometimes! ROFLMAO

  12. SPY 109.79…. (109.92 actual top)…. close enough for government work.

    Great call, Leo!

    • Thanks Woody…

      I knew we would get there eventually… but I didn't expect it to be like it was with the sell off yesterday and gap up rally today. I thought we would hit it after the FOMC meeting and sell off today. So, I was still fooled.

      • C'Mon Red. Take it while its there. Tommorw will another chance to get it wrong!

        Trust me, I do it all the time!!!

        • Ok, I'm patting myself on the back now. I called for 109.79 and got it today (better late then never). Tomorrow should be interesting too. Do we rally on up, or fall back into the channel?

  13. Dow and SP broke through the bottom of that ending diagonal that's been going on most of the day. Couldn't get above the highs of July 14,15. Yeah Yeah Yeah. Let's get some more selling into the close. We have a date with another flash crash Monday and can't get one until we get some selling ahead of it.

    • Astro has July 26 as bad day(Opening day for the grand cardinal climax). It's also 55 trading days from May 6, flash crash day. July 14 was 55 trading days from April 26 high. It was posted over at Jaywiz's that someone else noticed a similarity to the April top fractal. Today's action was a technical reaction for an indicator I can't really discuss. But if the rally continues tomorrow and there is a close above last week's highs then it won't be so pretty for the bears.
      Some are calling for a top on July 26 while others have indicated that Arch Crawford is calling for a rally into July 30 which contradicts some other things I have read and muddies things.

      • NYSE has the highest tick close today going back 6months according to stock charts and closed on the high tick of the day. 2 days ago there was the huge intraday tick reading which doesn't forebode well for the market over the next few weeks or months accoring to Cobra via Bespoke.

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