BULLS WATCH YOUR STEP, THERE MAY BE A CLIFF RIGHT BEHIND THAT CHRISTMAS TREE
I'm about to pee in the bull's cheerios. Or if I may invoke a Christmas motif, I am about to pee on Santa Clause. I don't necessarily want to berate the bulls at present since I count myself as one of them via my current portfolio exposure. However, it is my responsibility to report what I see as I see it. That's the point of this website. An unbiased reporting of observations regardless of my current book. It helps me and hopefully you in making decisions that will keep us all from going the way of Willy Lump Lump.
There were some problems today from a pure price action perspective. It is a well known fact that this market has made it a habit of putting together most of its gains over the past few months via upside gaps that have very little in the way of intra-day gains. What happens is we gap up overnight for one reason or another, mainly due to a positive action with respect to Europe. The market simply spends the rest of the day either moving sideways or adding another percent to the one or two percent gap that nobody managed to catch.
When the market is left to its own mechanisms - without the benefit of a news driven gap - the action hasn't been anything to write home about. Today was a prime example of the problem the market faces in terms of momentum and sheer power. There isn't any. That's the bottom line.
You can blame it on the lack of liquidity given the holiday season all you want. However, I should remind you that past the first half of October, this has been the modus operandi for bull runs that do not begin with gaps. Without the gap the bulls are crap. A t-shirt is born.
That should leave the bulls asking themselves:
1. How will we function with the much lauded 200 day moving average lying dead in our path?
2. How will we overcome the October highs above 1290 without the benefit of further gaps?
I'll tell you how. The bulls need more gaps. The bulls need news driven action to make it stick. Problem is there is only so much that can be announced before the bulls have to do it themselves. Short of the singing of kum ba yah in Europe by members of the ECB and governmental authorities, there isn't much more good news that is going to come out over the next few weeks. That's a problem.
And then we have this chart. Could it? Would it? Will it? You be the judge. I am currently net long. We'll see where I am next week.
click chart to enlarge
