The rally from the 11/2 low appears to be complete. The markets made a new countertrend rally high this morning around 10am followed by an unmistakable impulse move down in 5 waves clearly visible on a 2 minute chart. Markets are presently in a small degree second wave rally up which should not exceed this morning's high. The risk is that the impulse move down is wave c of a flat correction and more rally is to follow. Of course this rally could extend in a more complex upward correction, but at the moment the upside risk is constrained by the October 21 high.
I have re-entered half short positions in the QID, TWM and SSG. I may add to those positions on a sustained move below the 11/4 low. I may exit these positions on a sustained move above today's high on higher volume.
One wonders after the disappointing employment report this morning how bullish enthusiam could sustain a continuation of the wave (B) rally.
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"One wonders after the disappointing employment report this morning how bullish enthusiam could sustain a continuation of the wave (B) rally."
Because optimistic bulls rely on it be a lagging indicator & because the administration has talked about +10% unemployment a lot previously.
Having said that i think bears can "lean" against today's morning highs.
I am not that old, but I do remember the 1970s and the late 1980s and early 1990s and I can tell you that the current economic environment is at least as bad if not worse for small businesses as the 1970s and nothing like the so-called jobless recovery of the early 1990s.
One thing that has occurred that many may not realize, unlike the slowdown in 2001/2, many small contractors in my area have scaled back to the point that they can't even take on decent sized projects.
Their former employees have left the area or taken on other jobs. So, even if demand picks up it will take months and perhaps years before it will translate to economic output.
One indicator that the media is not talking about is credit card debt. Outstanding credit card is falling every single month. This is a great thing in the long run, but I think it is a great leading indicator for final demand and it is falling.
IMO, the market is rising in anticipation of an end to the recession, but when top line growth fails to materialize next year, many will be sorely disappointed.
All that may be true, but how many times have you said that price tells all ?
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