After seven up weeks we see a candle printed on the Nasdaq this week that shows hesitation as we test a key pivot at the 2,031 year 2015 high Resistance area. I say normally because nothing about this market is normal any more. It has defied all logic and quite honestly, has changed its technical stripes. Normal bearish candles are not working with any consistentcy such as they had years prior. Gap ups that fail after a move higher or black candles on gaps that would normally signal the end of a move are now being entirely ignored for the most part thanks to current Fed policy. Candles such as we saw this week on the Nasdaq fit that bill for a topping period but would it shock me if we're up next week? Not one drop. It should be a temporary top at the very least but who knows folks. Your guess is as good as mine. I can't trust these candles to work as I have before. Above 5,231 we have no price Resistance to deal with so that would be a positive. Lets see how next week plays out with this test. While our markets were on the quiet side this week Europe played some catch up with the major markets there mostly up between 2-5%. See our German DAX Weekly chart in this series below.
This morning the market waited on a very important economic report on retail sales throughout the country. Some real optimism abounded. Expectations were for +0.4% of an increase month over month. Not to be. An extremely disappointing number at 0% came in. The market reacted as it usually does to very bad news on the economic front. With a yawn. Why? Because the market knows that bad news increases the odds that rates won't be raised this year. That was already a slam dunk thanks to it being an election year but this just puts the icing on the cake. The fed is a massive dove and wants rates to stay low for a prolonged time due to the reality of the global economy. She uses Brexit as an excuse and anything else she can get her hands on. This report is another feather in her dovish cap. She will use it as an excuse to say we need to be data dependent as usual. That we need to see these types of reports improve over many consecutive months before we will consider raising rates again. Today was a fun day for the fed as bad news for the real world is great news for her plan to keep rates where they are for a very long extended period of time. She doesn't have to worry about being urged or forced in to a rate hike which she eventually will be when things do get better. That said, who knows when that time will actually be upon us. We're seeing no signs of that right now to be sure. All the liquidity we've been fed along with those low rates is basically still doing nothing for the economy. All of that said, 2134 or bust for the bears. Above and things are fine.
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Peace,
Jack Steiman
Robert New
