Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Everytime we begin a rally off oversold conditions one has to have in the back of their head this market’s incredible ability (since 2009) to rally straight up in a V shaped manner without any rest and letting anyone in. Here we are 3 days in from Monday’s bottom and all we have done is gap up 3 days in a row and of course no one can get in except for buying the gap ups. While the coast is not clear a few more days like this and it’s going to look like yet another V shaped move.
The question now is the resistance overhead WAY TOO obvious – we have the 50 day moving average overhead which served as a rest stop this morning plus the mega trend line from November’s lows just above that. In normal times that should provide a heck of a lot of resistance but we know this market acts anything like normal when a central bank is involved. Speaking of, since last Friday all they have been doing is sending out one minion after another to in essence say “we are sorry, Mr. Market”. Pathetic really. But it what it is.
This morning the gap up blew right through the 38.2% retrace and the 50% retrace is up ahead where all this congestion we speak of is. Also there is the gap down from last Thursday that started most of this mess. To recover it all in such a short period of time would be … well I suppose par for the course in the QE market, but a bit head scratching otherwise.
This set up where a breakdown occurs and then the market rallies back up into resistance used to be a “no brainer” short set up, but since 2009 has been a way to destroy shorts as the “V” engulfs everything in its way.
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