The market is sure testing the patience and conviction.
How many dip buyers were sucked in today? I bet the whole lot. People have been fooled to believe that European mess has been resolved and from now onward Euro and risk assets will go up. In other word, someone believes in Santa Rally.
But hold on. The rally is not due till 21st December. Why? Because NY Fed says so. If you can make out the riddle, please email or send your comments.
If you remember my yesterday’s post, a rebound was due. Only the size of the rebound is higher than anticipated. So I added to my short and also added a short position in Gold. Once again, if you remember yesterday’s post, there is a negative lease rate on gold, folks, Yes, negative. In September 2011, the negative rate was -0.48 and gold prices saw a huge correction. Now it is -0.57 and gold prices are struggling at the top of the channel. Will it be any different this time? If the European banks are scrambling for USD, why you and I should be chasing equity today? Just because someone is manipulating? If the markets really believe in the solution to the Euro mess, gold should have gone up substantially. There is really no appetite for risk.
While my cycle analysis and liquidity analysis is pointing to a short term bottom by December 14-15, my good friend Cobra, who does some excellent technical analysis, has this to say about today; “ When a Major Accumulation day follows a Major Distribution day, a down day next day and most likely the lows will be revisited.”
So now the relief rally is over, there are no more anticipation of any lasting solution, only thing left to lift the markets is hopium and manipulation. Realization is coming next week and aren’t we ready!
Have a pleasant and patient weekend.
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