(For What It’s Worth)

There’s an awful lot of “See, we told you, buy the f’n dip and prosper!” chatter across both the mainstream business/financial press, along with many of the wanna-be financial “genius” pundits filling up the rear.

However, much like I said on my show earlier today: This latest “recovery” has all the makings of an epic fake out, because this is precisely what you used to see in days-of-yore when central bankers had little to no daily influence on said “markets.” i.e., Bounces such as today’s, after a sell-off such as Friday, along with where the “markets” were (e.g., coming off all time highs) were commonly viewed as suspect because, they were more about reflexive buying rather than committed buying. A distinction that makes a very real difference. Or, at least, used to.

So, with that said, I’ll just post a chart I’ve annotated using the S&P 500™ as of last Friday’s cash open through today’s (Monday) cash close via a one minute interval candle/bar chart. To wit:

(Chart Source)

For those that aren’t chart savvy, all you really need to understand is what it shows about today’s “market” price action. i.e., demand to buy, sell or hold.

As you can see by my notations, they sold hard right at Friday’s open, supposedly, because there was a new COVID variant hitting the globe and the immediate fallout presumed was: “They’re gonna lock it all down again!!!” You could feel the panic through your screens whether you were watching the “markets” or anything else, it was palpable.

I have stated that was a second cause, the first cause, which is far scarier, is the Fed not only tapering QE (quantitative easing) but the possibility of accelerating the schedule. That is what originally “freaked out!” the markets, in my humble opinion.

Now, as hard as the sell-off on Friday was, it was also very easily assumed that the severity of it was in regard to both Friday being a shortened U.S. trading day after a major holiday with liquidity issues.

However, if that were the case: Now with the implied all clear signal of “Don’t Panic!” from the U.S. administration and others. One would presume, at a minimum, the gap down from Friday’s open would have been at least 75% or more filled, if not entirely, before any resumption of selling would occur.

Hint: if you look at the above chart, you’ll see very definitively, not only did it not do anything close to that, rather, it barely closed any of it before it just pinged back and forth all afternoon session long in a tight channel, drifting lower. Then, at the end of the session – sold off even more, barely holding above a 50% recovery.

This type of price action used to be considered signalling for: confidence shaken, not solidified.

Today? It’s anyone’s guess, and guess it will be, because no one knows for sure, repeat, no one.

But, if past is prologue, meaning, what was once reliable is back? Then one should be paying very careful attention this week, especially with both the Fed Chair (Powell) and Treasury Secretary (Yellen) along with a host of others scheduled to speak publicly over the next few days, including the release on Wednesday of the Fed’s “Beige Book.” i.e., Things could move abruptly and suddenly – and not in a good way.

As always, we shall see. But see, I believe, we shall and soon.

© 2021 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.