The collision of global markets and social mood

Tuesday, December 17, 2013

Where The Real Danger Is

Asia was mixed last night, and Europe is largely down.

CPI is down too. But wait. The headline number was below consensus. But the Fed doesn't look at the headline number. The Fed looks at the "core" number. The core was above consensus. What will the Fed do?

In the long run, it doesn't matter. But they've got two days to appear in control. The decision is on Wednesday.

The full moon was this morning at 4:28 am EDT. Maybe that had more to do with the market jump yesterday than anything else.

There is a volume shelf at roughly 1802.50-1804 that I'm noticing. This shelf coincides with the 78.6% retracement. Staying below that area should keep the pressure on lower prices. Breaking above it likely targets new highs.

1746.20 remains the pivot for the rally in my opinion. Only if this level breaks is the market real danger.

More danger: CNN just ran a typical late-in-the-rally story. Trader turns $1,500 to $1 million in 3 years.

What they fail to mention is that penny stocks often do well at the end of long rallies, as more and more people think that they too can tame the markets and make a fortune. EWI calls it Flight From Quality, which is very descriptive. The new players rush in and play far down the food chain in the cheapest stocks where $1000 can buy a sizable position. What is rarely if ever mentioned is that as soon as the markets turn down in earnest, the OTC volume dries up and most of these players are stuck with junk.

This article suggests Danger Ahead.

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