Late day rally sent the SPX up nearly 1%. Futures and SPY continued to rally until the 4:15 close up another 0.5%. However, the advance/decline line leaves a lot to be desired for a rally as Energy names carried the weight. Also, the 10 and 30 year bonds suggested some dislocation in the credit markets... I'm calling Shennangians on the rally.
I highlighted some entry points (or exit points for me, since I was short) in the chart above. Several indicators/oscillators were also hinting of this move prior to it's happening (not shown).
Is $55/crude bringing in some value seekers? I overheard a thnkorswim trader on Bloomberg saying that "oil at 50$ seems to be a floor because...ya know...50$ has always been cheap for a long time..." Outstanding analysis!!!!!! I'm quoting from memory but that's pretty much what was said. Let's take a look:
Source: Bespoke Investment Group
While there may be a counter-trend rally in Crude, it's still should be viewed as just that. When was the last time the United States, UK, Germany, Ireland, Spain, Italy, Estonia, Latvia, Hungary, Japan, Hong Kong, Iceland (froze over), South Korea, Brazil, Canada, New Zealand were all in a recession - at the same time? Russia, Nyet (not yet). China, hard landing. France, hiding.
It is these very cross-currents that, imho, have most under-estimating the downside risks in equities.
Still, a year-end rally is not out of the question. I welcome the shorting opportunities.
