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Wednesday, March 18, 2015

Daily update 3/18 Gaming the system

That was an interesting flight to everything after the FED announcement.  Stocks, bonds, gold and oil all up markedly.  This is a classic example of gaming the system.  Leading up to the FED announcement there were plenty of people saying the word "patient" would be removed from the statement and that the market would sell off.  I even read somebody saying the headline scanning computers had their algorithms programmed to sell if the word was missing.  When I saw that this morning I thought that was really odd.  Since when do the Wall Street firms tell people how their computers are programmed.  That was all disinformation designed to get people to go short before the announcement.  The futures started cruising up a couple minutes before the announcement.  I don't think it actually would have mattered what the statement was.  I think the computers were all set to buy no matter what.  They bought all kinds of assets as mentioned above.  That caused a massive short squeeze.  The big boys had a field day today and there is probably a bunch of them sitting in a bar somewhere in NYC laughing their asses off.  Job well done!

SPX tested up into the 2103-05 resistance area and was turned back (at least for now).  Breadth was a strong +78% as they were buying everything.  New highs even popped up to 218.  New lows remained elevated at 67.  SPX crossed the 18 SMA.  Can it stay there? 

The futures ran into the upper Keltner channel line.  That line was resistance back in late Jan.  Will that be the case this time?  The futures got within 10 points of the all time high so this qualifies as a retest of the highs.  Will it power through or be turned back? 

Today should have flushed out all the weak shorts.  SPY completely filled the 3/4 gap down also.  This is an interesting situation.  He we are testing the highs on a FED induced move.  We know those moves have high odds of being completely retraced and usually within a few days.  If we retrace this move now it will look like a failed test of the high.  Will we get a second up day in a row tomorrow or will the March pattern repeat with a down day?  I guess we will see.  This may take a few days to shake out.

Today turned all the short term trends up.


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