Capitulation? Not Quite
Never let your ego stand between you and making money
In financial markets this morning the Nikkei is up/down/unchanged and Europe is rallying/declining/flat-lining. Here in the Big Apple/Canary Islands/subway turnstile, U.S. futures are green/red/yellow as traders anticipate/dread/manufacture economic data expected to show surging/diminishing/heretofore inconceivable signs of inflation/deflation/stagflation. Meanwhile, in the world of commodities/bonds/The Apprentice, all eyes will be focused on crude oil/Treasuries/Carolyn Kepcher until the next Federal Reserve meeting at which economists widely doubt/hope/fear the Fed's next move/blunder/hiccup will derail/bolster/paralyze the stock market...
Whoa, sorry about that! Was running a tad late this morning and the linear auto-commentary program kicked in before I could sit down and catch it. Never mind all that software spewed gibberish. Let's get to work... human work.
When we left yesterday afternoon, Boo was nervously eyeing the Dow 10,600 level and a handful of long-term bullish percent indicators ready to send him packing. While the Dow sits below the line in the sand Boo has drawn, and although the short-term technicals are reaching well into overbought territory, the positive technical reversals in Point & Figure land have changed the context in which he's operating. Discipline requires a more cautious approach for our furry friend.
The big picture problems remain of course, but they've been part of the financial landscape for quite some time, and certainly they were prominent throughout 2003 and 2004. A broad macro thesis is certainly necessary for a successful trading and investment strategy, but a thesis is designed to face up to, and occasionally defer to, the slings and arrows of the forces of supply and demand. For now, demand is in control.
Is this capitulation? Not hardly. There is a difference between contextual indicators and timing indicators. Boo's contextual indicators, the bullish percent measurements of supply and demand, are telling him the conditions of the broad market have shifted from supporting lower prices to supporting higher prices. Tradable moves both up and down will still be there for the taking. But for now, the mode for Boo is one of discipline, caution, and capital preservation.
Know your risk profile as we prepare for economic data that will generate at least some short-term posturing today. But keep in mind too the non-linear aspects of these tiny pieces. What we think we see coming is rarely what we find ourselves greeting.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter