Stairs Up And Elevator Down?

October 30th, 2014
in contributors

by Poly, Zentrader

This is an excerpt from this week's premium update from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. Now offering monthly & quarterly subscriptions with 30 day refund. Promo code ZEN saves 10%.

Follow up:

This reflex, counter-trend Cycle move, has now added 180 points in 10 sessions, more than eclipsing the 17 session fall that preceded it. They often say that equities take the "stairs up and an elevator down", which is why I find it very difficult to respect a move of this magnitude. To me, the only condition in which I can accept this type of all-inspiring move is if the market was headed for a final blow-off top.

However, the Cycle count does not show new highs, at least not coming for another couple of months (only from the next IC). Massive "surprise" moves, such as a blow-off, have been known to occur from very unorthodox setups such as these. The point is that this 5 year bull market continues to demand my respect, even though the expectation for new all-time highs here is no longer warranted. In the end, price trumps any technical analysis and discipline.

The S&P continues to bounce back much stronger than I would have expected. And this makes the move all that much harder to trust. To me, the action has all the characteristics of a desperate, counter-trend rally. This is how (bull) trapping markets form and I continue to see this as a 2nd Daily Cycle coming off a failed Cycle. In that case, my only expectation is to naturally remain bearish, while looking for a turn lower to begin at any moment.

I'm curious now to see what role the ending of QE will play in this scenario. In my opinion, like we witnessed in past culminations of QE programs, this environment does fit the profile of a failed Investor Cycle well. This market will now need to sustain itself without QE and from a lofty (and failed Cycle) position. I find that difficult to see.

10-29 Equities Daily









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved