HIGHLY SUSPECT Rally - am I alone on this?

Bears seems to be losing faith, and there could be a good reason(s) but this rally seems highly suspect. Technically, the MACD turned down, ditto for momentum, and the VIX & VXX are on an uptrend; also the ST 7/20 MA has crossed down. Geopolitically/fundamentally: FED is on hold until after NOV; in any case, FED can't do much more to help equities; EUROPE is going nowhere except down during the next few months; more importantly, FAR EAST (China, Japan et al) is getting worse. While I expect a rally into year-end, from late November into December, it seems the path of least resistance is down. But, not the end-of-the-world crash; rather, a steady decline with the usual dead cat bounces during the next 6 weeks. Of course, all this is mere opinion, conjecture, blah blah blah

This is probably the last rally, but it will end when everyone stops picking a top!

Bears seems to be losing faith, and there could be a good reason(s) but this rally seems highly suspect. Technically, the MACD turned down, ditto for momentum, and the VIX & VXX are on an uptrend; also the ST 7/20 MA has crossed down.

Geopolitically/fundamentally: FED is on hold until after NOV; in any case, FED can't do much more to help equities; EUROPE is going nowhere except down during the next few months; more importantly, FAR EAST (China, Japan et al) is getting worse.

While I expect a rally into year-end, from late November into December, it seems the path of least resistance is down. But, not the end-of-the-world crash; rather, a steady decline with the usual dead cat bounces during the next 6 weeks.

Of course, all this is mere opinion, conjecture, blah blah blah

Fed can do A LOT to help equities ... its just can't do much to help economy

Fed can do A LOT to help equities ... its just can't do much to help economy

It's the same thing...cause and effect.

Fib

Fib - I am confused by your comment - if you are saying the economy and the equity markets are the same, well you are contradicting what traders including yourself I believe, have said for a long time - the economy is NOT the market, e.g. a bad economy doesnt mean a bad stock market or vice versa.

Fed can do A LOT to help equities ... its just can't do much to help economy

very true.....were I a wall street baron I would thank the fed on every single day from here in advance .......in any case it seems looking at previous comments that people here are forgetting that it's not all about the fed, but there's europe at the door every day you wake up. Next monday you could wake up and hear that spain needs an avalanche of money.........and the game goes on and on. Firmly considering that the elections are sacred to the g@@ of market stability, it seems to me a pause is needed before going up again. I say it also looking at milan which seems at its peak

Edited by andr99, 31 August 2012 - 10:47 AM.

Well OF COURSE THE RALLY IS HIGHLY SUSPECT !! Expected on light volume... totally expected. But the PULLBACKS ARE JUST AS BOGUS !! Like that joke yesterday on 1.2B. Good time to be on vacation - really is no fun to have your back against the wall with a bunch of robots hooked at the umbelical cord to a printing press jamming you and your short position to the Moon. There are things to do, you buy support and sell resistance in a sideways trending market. Example yesterday was SOX 390 Support (As outlined on the Linked In Site "Semiconductor Stocks and High Technology Investing") Bought SOXL at 390 support yesterday and sold today for a point at 396 Resistance. Things to do. You have to execute, don't get cute, step up and take the profits before they turn it back up/down on you. Right here your focus is on AAPL 661.16 Hourly Support test in progress, if that breaks on volume or we see the creek jumped then there might be further downside today....

Bears seems to be losing faith, and there could be a good reason(s) but this rally seems highly suspect. Technically, the MACD turned down, ditto for momentum, and the VIX & VXX are on an uptrend; also the ST 7/20 MA has crossed down.

Geopolitically/fundamentally: FED is on hold until after NOV; in any case, FED can't do much more to help equities; EUROPE is going nowhere except down during the next few months; more importantly, FAR EAST (China, Japan et al) is getting worse.

While I expect a rally into year-end, from late November into December, it seems the path of least resistance is down. But, not the end-of-the-world crash; rather, a steady decline with the usual dead cat bounces during the next 6 weeks.

Of course, all this is mere opinion, conjecture, blah blah blah

I think under the cover they are moving the money away from stocks. The true direction for today will show up soon

Edited by redfoliage2, 31 August 2012 - 11:23 AM.

if you are saying the economy and the equity markets are the same, well you are contradicting what traders including yourself I believe, have said for a long time - the economy is NOT the market,

I'm confused by your statement Karen as I don't believe there is anyone here at Traders-Talk that believes that the Fed, stocks, and the economy isn't interconnected.

What the FED does or doesn't do not only has an echo effect for stocks, but it is the prime stimulus that drives economic activity.

Maybe you can clarify by giving an example?

Fib

if you are saying the economy and the equity markets are the same, well you are contradicting what traders including yourself I believe, have said for a long time - the economy is NOT the market,

I'm confused by your statement Karen as I don't believe there is anyone here at Traders-Talk that believes that the Fed, stocks, and the economy isn't interconnected.

What the FED does or doesn't do not only has an echo effect for stocks, but it is the prime stimulus that drives economic activity.

Maybe you can clarify by giving an example?

Fib

Zimbabwe is a prime example. Your stock market can go up 10000% and the country can be in a depression. Stock market is a product of printing presses. It has got little to do with economy. It's the liquidity that drives both the stock market and the economy. It's is entirely possible that the economy may not respond to the same stimulus that the stocks respond to, in certain environments.

L -> E (Liquidity drives economy)
L -> S (Liquidity drives Stocks)

does not mean E -> S . The transitive relationship need not necessarily be true. The rally during the great depression is a prime example.

The stock market always leads the economy as the liquidity can show immediate effect in the stock market as opposed to the delayed effect in the economy. The academics have done a disservice by theorizing this as the stock market discounts the future economy. The stock market knows jack squat about the future of the economy as much as it knows about its own future.

Edited by NAV, 31 August 2012 - 12:12 PM.