Among the many gurus, savants, yogis, yoginis, fakirs, fakers (see D. Trump) we consult on a regular basis one has the felicity to cut to the heart of the matter — Yogi Berra. The struggle at this juncture is not over. The support line at the bottom of the (potential) H&S pattern, as well as the trendline from Mar09 are lending strength to contrarian efforts to make a profit off this over-sold condition. Wednesday’s sell off created an obvious oversold market and true to form contrarians bought it — preventing a potentially disastrous slide.
Ostensibly this is about Greece. And Greece is being used as the trigger for exaggerated volatility. As we see it Elon Musk could shoot Greece into orbit and it’s real economic impact would be less important than hurricanes in Puerto Rico (or Maryland). Perhaps we should say long term impact. Short term it might be like a hurricane in the Bermuda triangle. In short and taking the long view the US economy is mending, Congressional efforts to prevent it notwithstanding. Just ask Janet. Or the IMF.
Was it Yogi who said, Beware of Greeks bearing bearer bonds?
We still think we are in for another leg — probably the final one — of the bull market. And that leg will begin when the present horse play gets boring. This view can be modified by heavy chart events. Should contrarian selling create a tipping point and big money join the short side we could still realize the negative implications we have been speaking of for several weeks. For the moment, it’s not over — that is, the ominous import of a H&S are in contest. But to cure the technical situation prices must close above the June high. In the meantime there will be ample trading opportunities. And endless roller coaster delights. A healthy corporate profits season could turn this oversold market into a buying opportunity. Readers who have sat on their positions may turn out to be the smart ones again.
Weather forecast: more of the same.