Bulldoodoo, Mr. Market

Wall of Worry – Why am I sending this email out at 3:55a.m. ET? What am I doing up staring at charts at 3:55a.m. ET? I’m habituated to all things market and pay attention to what they’re doing overseas. Plus, I have a vested interest.

The narrative in the financial arena is now “a new bull market.” By using the word bull, I have insight into what they mean.

Media would have me believe that the reason for the last three-day pop is due to the idea that the market, a forward-looking discounting mechanism for future cash flow, is looking past Q2 and starting to discount the rebuild of Q3 and Q4.

 Only time, not CNBC or Bloomberg, will tell if that bull plays out.

 Oh, and one thing you need to know about market gurus, there’s a saying on Wall St., “If you’re going to predict, predict often.” So I’m sure any and all predictions will change.

 The chart action on the SPY, DIA, & QQQ (proxies for the indices) hit or just pennies away from a downward pointing 20day sma. In short, this is a relief rally, in my opinion. Relief rallies can be powerful and misleading in that they end up as shown in hindsight as a bull trap.

 Terms like relief rally or bull trap may sound like Wall St. bulldoodoo, but traders know them to be real. If you’re new to the market in this environment, just make the observations over the next few days.

 The thought comes to me that if things are so glowing looking forward, who’s selling to the current buyers? The investors and traders who didn’t sell during the March 9-13 period, which if you note is where price level is as of Thursday, March 26, at least for the QQQ. March 13 and yesterday show me a double top while resting near the 20day sma. Under current circumstances, I’m playing that bearishly.

 Did I mention the VIX was at 65?

By the way, give me some feedback.

About wallstreetpirate

Thirty-five years in financial services from insurance to registered investment adviser, and trader (now retired). Currently helping wanna-be traders and experienced alike as a trading coach and mentor. I've been in and around, on top of, in the middle of, and on the bottom of the stock market for a long, long time. Here's all I've learned: Trading is about behavior, psychology, and appreciating what the charts are saying technically. You can't fake it. Either you know what you're doing or you don't. And as much as this isn't rocket science, it takes knowledge and a skill set to survive.
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