Nasdaq leads the charge
This will be my last post of this week since I am in London giving a talk at the London Money Show. I will have a Weekly Wrap on Saturday as usual.
The divergencies between stocks and the real world are getting really stretched now. Yesterday’s Economic Confidence reading was a shocking -35 (even lower than last month’s -19). This is the largest monthly drop since records began in 2008. It measures American’s confidence in the economy. All the while, stocks continue their Ben-fuelled climb.
Already, there is talk that the Twitter IPO this week will mark the top. I’m not so sure. Bubbles have an awful habit of going way beyond what already appears to be an outlandish estimate.
One way of looking at it is through the Nasdaq – the tech index that is leading the charge up the mountain.
Tech is hot. The Dow is not.
Here is the weekly chart going back to 2008 and just admire my lovely tramlines. They have it all – a gap at the start in 2008, and several excellent well-spaced touch points on both.
There has been no trading whatever outside of the tramlines since 2008 – a span of five years. That is remarkable.
But now, the market is zooming up towards the upper tramline (resistance) – and if it continues, would meet it at the 3,500 level (3.400 currently). Only another 100 pis to go.
And if the Twitter IPO gets away with gains (unlike the Facebook IPO) – which appears likely – that target will be within reach.
Also, many are looking for a Santa Rally and if the Fed does not spring a major surprise (unlikely this year), they should get one.
If I am correct, the 3,500 area will be the likely turning place. That will be a terrific place to look to position short.
The acceleration since January is startling. It has risen exponentially from my lower tramline and is almost hitting my upper line.
On this final leg from late last year, I have a new tramline pair. The upper one meets the older tramline up ahead in the 3,500 area. That will be formidable resistance.
It’s all adding up now towards a final flourish!
ROYAL MAIL
Our very own latest IPO is showing tramline behaviour already – at only a few days old:
Tramlines work – even with babies.
So far, the uptrend is intact, but momentum is not keeping pace and we may get a lower tramline break up ahead.
T-BONDS
I managed to not only ride the rally up from my wave 4 low but take profits at the wave 5 top, then go short and ride it down:
Today, it is testing the Fibonacci 38% support level – and on my lower tramline. This should be major support.
That is why I decided to take 200 pip profits for my A Account here. I expect a bounce.
