We have always thought the most brilliant thing that was said about anything during the Bush administration (pace diablos) was Rumsfield’s classic statement that there are knowns and unknowns and of, you know unknowns you don’t know you don’t know and things you know you don’t know and..where were we? Oh, yes we were applying that bit of wisdom to the market pundits who don’t know, but who think they know. They don’t. As they used to say on that old radio program: Only the Shadow knows.
In this case the chart is the Shadow.
It says that the turbulence we are experiencing now is, technically, the product of dancing along that long term support resistance line. You thought it was Greece in the gears — and all along it was just a technical phenomenon. In confusing times like this the general investor sees his portfolio rocket up one day and get ripped to shreds the next. These are small infantry skirmishes in the great war. Prices would have to take out the November lows by 5% to reverse this bull market.
In the emotional tug of war sometimes it is best to step way back and look at the unemotional PnF charts.
Here the SPX PnF looking for 1550. Readers may remember that we have been talking about that target for some time. We would be surprised by a wave reaching that anytime soon. In all likelihood the market will wait for the Sunnis and the Shiites to finish the election. Certainly Congress will not pass a jobs program till then. That would be too commonsensical.
Here we repeat our favorite Mark Twain bon mot: Americans are by nature an open gregarious and honest people and our only native breed of criminal is the Congressman.
Here the Qs looking for 75.
Here the industrials looking for 13200.
Some of these targets are reachable within this wave. But those other criminals — the LIBOR banks and the too-big-to-fail-but -they-can-anyway (9 billions? a mere bagatelle when you can rig the markets however you want.) (Cf. JP Moby Whale). Those other criminals roil the water and traders go with the wind.
Well, in time they will be gone with the wind.