.
.
Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
– John Adams 1798
.
.
Last night a profound change occurred in this country. A rogue and extremely unpopular President inexplicably sanctioned the illegality of millions–to the apparent detriment of hundreds of millions. So, given that extremely troubling development–what might a rational person expect to happen in the markets?
But, as we have seen time and again–the pros can and do use the futures to accomplish political ends–and so the gaudy overnight squeeze should come as absolutely no surprise during arguably the most corrupt and reprehensible US regime ever to control the federal government.
.
.
.
Yesterday’s IT trident setup was negated early on, which probably isn’t at all surprising in retrospect.
Today is November OpEx and so I started looking at the longer term trident channels to see where the next resistance setup might come…
I think we are going to get a sharp reversal at some point. The next potential trident channel is drawn off the 11/16/2012 low and then through the recent IT pivots. That channel’s rising top rail is today in the 2074 area.
On the daily chart above I have also drawn in a tentative bearish channel–but that is for a visual only–as we are still awaiting an official top to be signaled either by the confirmation of unanimous spotter signals–or by a technical target having been reached and then confirmed by a counter-trend sell signal.
This market is now very extended. The closest primary trend support is more than 100 points lower–and we haven’t had a pullback in 27 trading days!
.
.
.
Zooming in to hourly bars, we can see that yesterday’s move lower was simply to sweep the stops under the VST trendline break. Once price broke back above 2043.75 it was off to the races and up to take out the remaining bear stops above 2054.
I have drawn in the next higher bullish trident channel and have highlighted today’s potential top rail touch location at 2074. As I did yesterday, I have also drawn in a tentative bearish trident just in case we were to get a pullback started.
These are crazy times–and so be prepared for the unexpected. As I said above, this market is now dangerously extended to the upside–and sooner or later we are going to get a correction so it is a good time to recheck those protective trailing stops under winning positions using Stops and Targets for individual issues.
This market is fully bullish above 1968, with the first ST counter-trend sell coming at 2014.50–but those supports are way below current prices. It would take a decline to 2025 from here to establish a new minimal ST pivot low and eventually allow the trailing stops to advance higher.
As I mentioned in a previous post–if I were pulling the levers of the market and wanted to reach a capitulation point…this is exactly how I would do it using the election as a fulcrum. The bears have been absolutely decimated and so once those forced buyers (to cover) have been eliminated…who is left to buy in such an extended market? That said, the trend is your friend until it ain’t…
…my .02
.
.