Hoofy's Full House
Sometimes, just sometimes, the last piece of the puzzle rises to the surface out of that great Spiritus Mundi in the most Dali-esque ways.
He was told he must first spend five years in contemplation. After the five years, he was ushered into the Dalai Lama's presence,
Who said, "Well, my son, what do you wish to know?"
So the pilgrim said, "I wish to know the meaning of life, father,"
And the Dalai Lama smiled and said, "Well my son, life is like a beanstalk, isn't it?"
(In Held 'Twas In I)
I was a better fader than a chaser at Wednesday's open. Initially that vibe played out. In fact many of the names I faded (some in the basic material sector for example) worked out. The move to thirteen thousand DJIA by the weekend after Monday and Tuesday's pullback was in the cards. But I didn't expect the market to deal Hoofy a full house on Wednesday. I didn't expect Boo to get hit in the head with a shovel.
However after the Boyz returned from lunch on Wednesday – as the 10-minute chart of the S&P shows – it was all as Danny Devito said to Arnold in Twins: "You look like you're going to e-x-p-l-o-d-e."
The S&P carved out a Cup & Handle on the 10-minute chart and exploded into the bell.
To be sure I thought we'd hit thirteen thousand before the weekend. But I never saw Wednesday coming. I suppose I should have seen it coming as Tuesday night I went out to dinner and leaving the restaurant there was a fat lady singing. Well, apparently she was only rehearsing. On the way home the car in front of me had the license plate HEDGEHOG. Silly me I didn't think it was a gardener, it was a Porsche. Maybe I'd had one too many passion fruit sakes.
Now granted, these aren't exactly algorithms to plug into your market models – they don't even count as anecdotal evidence. But sometimes, just sometimes, the last piece of the puzzle rises to the surface out of that great Spiritus Mundi in the most Dali-esque ways. Couple that with commentary from some pundits and money managers to the effect that because the market is straight up it looks very sustainable and, well, you get the point. Where I come from one of the few things you cannot do is sit on a spike. But then again I didn't run away and join the circus. No, I waited until I could make that a career choice – trading this kind of a market.
Certainly, that's the way it feels some days – like a circus - with the big elephants leading each other around by the tail and stocks getting shot out of cannons on earnings over the top of the tent. They couldn't just buy them while they were in the bleachers? But who's complaining? There's no crying in Malibu. An Apple (AAPL) a day keeps the doctor away.
AAPL was, in fact, poised for par as telegraphed by a big picture Cup & Handle Pattern. This is what I call a "Running Cup & Handle" as was traced out from its 50 DMA.
But color me a cynic: clearly we've entered the phase where fund managers don't want to challenge or debate the quality of earnings. The big Boyz have zipped-up their new momentum outfits – red noses, orange hair, plaid baggy pants built for two and size twenty shoes. Do the quality of earnings matter for clowns? Only if they're investing – not trading. Does currency translation and corporate buy backs have an effect on earnings? Did AMZN explode on a lot of new buying by folks that just had to own it up eight points up or did the forty-eight million shares short have something to do with it? Color me a cynic but there are a lotta, lotta shorts out there. Be that as it may we are reminded of something that someone who knows a little something about the market once said – "Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend and step off before it is discredited." That man was George Soros.
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