Understanding is way behind on the importance scale of dealing with the markets. Right up in first place is the simple act of analysis. If you can analyze and suspend disbelief you can not only prosper in the market you can be the superman of the universe. By which we mean, what? Trading range breakout? Some of our readers (astute readers) have called attention to the resemblance of the trading range to a double bottom and indeed this appears to be what has occurred.
Really, sometimes we think that economic analysis has absolutely nothing to do with what is happening in the market over the short term. The short term is an uptrend.
Obviously to be of any long term importance the Dow must clear the all time high. While we wait for that to happen gold has broken an important trend line and is not a short term hold. Long term the gold market has not finished its bull market, and will back fill and consolidate here, and discourage all the recent hangers on. Silver is in the same mode.
IEF bonds look to be flirting with a top. However it is not unusual to see down waves of this magnitude before the major trend resumes. The purpose of these downwaves is to remove people from the market who don’t deserve profits derived from technical market analysis.
The unworthy shall be punished and cast into confusion.
Meanwhile, worthy or not, those who woke up from herding their goats to discover they had been beddoing down over enormous pools of petroleum continue to import our dollars in ever larger numbers, and, begging bowl in hand we try to at least keep up by staying long OIL.
The action picks up in the dollar. Unless an adroit and skillful trader we would not be shorting the dollar in this period. Numerous “power bars” to the upside have occurred here.
Not only that, there is a feeling of turning point in the air of the markets. It doth not profiteth one to question why this is occurring. It profiteth one to observe that it is happening and adjust his positions accordingly. Is the market the product of intelligent design, or did it just happen, breaking its way up out of the slime beneath the oak tree on Wall Street? Who Knoweth? Eschew prayer. Embrace analysis.