Really bad news = Dow up 100 pips!

Really bad news = Dow up 100 pips!


Yes, the old flame is still alive.  The Consumer Confidence level in October was down a whopping 9 pips to 71, which is still higher than in 2011 – Jan 2013.  But I recall numbers in the 120 range prior to the Credit Crunch pre-2009.  That was extreme bullishness.  Today’s sentiment is a pale shadow of those days – yet stock markets (true barometers of social mood) are much higher than then.

The divergence is striking.

Of course, that was the green light for a big stock rally, placing the divergence between hope (more QE please) and reality (weak growth, flat wages and inflation) ever wider.

Today is the ADP Employment Report and according to Bloomberg, expectations are not high for added jobs, as the government shut-down is taken into account.

But what if a higher number emerges?  Would that disappoint the bulls?

Also later today, the Fed deliberations will be made public.  I wonder if they will shock the market by suggesting moving to a higher level of bond purchases?  This was an idea I had earlier this year, as US economic data showed an economy that was not doing what the Fed wanted.  Unemployment was still stubbornly high and GDP flat.

I know it is from left field, but Yellen (a dove) will be at the helm soon and Ben doesn’t want to leave, being known as the guy that failed to stimulate the economy by timidly not doing enough.

I know this is heresy, but heresy has a long and noble track record (see Luther).


The Dow is moving closer to my upper tramline at around the 15,800 mark today.

In the sixteen days of the latest rally leg, only two have been down days.  Remarkable.  And the VIX remains in the complacent zone at 13.

This has all the hallmarks of a final spiky thrust up, which may well occur later today as the Fed minutes are released.

That will be the time for fading the market.  If I see a spike above my upper tramline and then a retreat below it, that will be a major signal for me.

If this occurs, the T-Bonds should rally towards my target in the 136-137 area.   Likewise the dollar.

Today should be fun!

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