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Market Lesson Learned?


The smart money doesn't just like to buy cheap, they like to buy dirt cheap. i.e. the crushing open of equities on Thursday morning into the chasm set up the dirt cheap buys.

That's entertainment... that's technical analysis. That's when it pays to follow technical analysis and be a tape reader - because the smart money knows they are in the loop. Yes, Virginia there is a loop, grow up.

Technical analysis works (amongst other reasons such as the geometry of time and price) because the smart money knows. The market knows. The smart money doesn't just like to buy cheap, they like to buy dirt cheap. i.e. the crushing open of equities on Thursday morning into the chasm set up the dirt cheap buys. The Fed waited until the March lows were tagged and to expiration day to unleash their power and unfurl their wrath.

Does someone want to teach the dark speculators a lesson? There was redemption, and then came salvation yesterday. Lay it all at the feet of the Sanctity of The Banks and the cadre of investment bankers who are the NYSE.

The system must be preserved at all costs. How about that last hour fake-out where stocks looked like they were going to nose dive again. When they started to turn, the hook was in - if they could come back at all, it followed they would come back in a big way to deep green. That's my story and I'm sticking to it.

Despite my belief that I do not think the downside is over, yesterday's large range volume reversal underscored the notion of a square out on Aug 16 at 1402. It was begging for shorts to be covered and some long side exposure. All the longs I bought in the last hour yesterday for a hope for pop up open I have kicked out - The Gift Horse Principle. Better to be lucky than smart.

I continue to think an analogue to 1987 could be playing out but this time the news is worse. I recall that the largest one day DJIA gainer point wise to date at that time occurred approximately two weeks before Black Monday.

Now what? I'm gonna do some watchin' for a bit... I got blisters on me fingers this week.
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