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Guest Post: Wait For The Retrace

Tyler Durden's picture





 

Submitted by Charles Hugh Smith from Of Two Minds

Wait for the Retrace

Too many people have been waiting for the stock market to correct. Maybe waiting for a retrace/rebound is in order.

The global stock markets' big dump yesterday has long-frustrated Bears salivating. Everyone knows the market has traded up for months on thin volume and heavy intervention by the Federal Reserve, so it makes a certain sense to expect the markets to cascade downward once the charade ends.

Everybody also knows the tradewinds that have filling the markets' sails--record profits, impressive gains in overseas revenues, the expectation that China alone would fuel a commodities boom for decades to come, to name but a few--have all suddenly ceased, and in the stillness, a storm--oil over $100/barrel--is gathering ominously on the horizon.

But too many hedge fund managers and other traders have been waiting for a big dump to make their year, which means the big dump is suddenly less likely. We might also anticipate that the Powers That Be aren't going to let their pride and joy, a manipulated market, roll over and expire just because Libya imploded and oil is heading over $100/barrel.

One possibility is a quick recovery after a few days of uncertainty and a retrace back up, ideally to a double-top. That's what we're looking at on the 10-year chart of the Nasdaq: a big fat double-top screaming "look out below." This is really a beauty to behold: technically, it doesn't get any better than this.

It would be handy if the U.S. dollar confirmed the change in trend by breaking out of its trading range to the upside. Nobody knows what will transpire, but it's something to look for.

As always, these are just the ramblings of an amateur observer, and do not constitute advice nor are they intended as advice--please read the HUGE GIANT BIG FAT DISCLAIMER below for more.

When this market does break down--and it will--then the fireworks may begin. Alternatively, it could just torture everyone with stutter-steps and false breakdowns for a few more weeks or even months. We'll just have to wait and see.

#404040;">




 


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Wed, 02/23/2011 - 10:18 | Link to Comment LongSoupLine
LongSoupLine's picture

on that note, silver just dropped 30 cents in 9 minutes on the CONex premarket.  20 cents of that in 1 minute at...wait for it...9:01.

 

Fukin' crooks!

Wed, 02/23/2011 - 11:11 | Link to Comment malikai
malikai's picture

Well that didn't work. Too bad. I'm in the "hoping for $10 silver" camp. Please Blythe, if you're listening to me, give us $10 silver! I will voluteer myself to be your personal slave for at least a day if you do.

Wed, 02/23/2011 - 13:26 | Link to Comment LongSoupLine
LongSoupLine's picture

well, the whore is trying it again during a low vol lunch blindside.  .35 cent bid stuff in 5 minutes.  hate that bitch.

 

BTFD and KBITS (kick blythe in the sacks)

Wed, 02/23/2011 - 10:16 | Link to Comment BobPaulson
Wed, 02/23/2011 - 10:30 | Link to Comment I Am The Unknow...
I Am The Unknown Comic's picture

great clip for the am.....thanks!

Wed, 02/23/2011 - 10:16 | Link to Comment FullFaithAndCretin
FullFaithAndCretin's picture

So, it might go up, it might go down. It might be sudden, it might be gradual.

Perhaps you should make up one of your minds.

Also, what disclaimer?

Wed, 02/23/2011 - 10:27 | Link to Comment arkady
arkady's picture

Bingo!  This post has no substance what so ever, just like a majority of investment forums and discussions.  Seen this too often, they present some TA, but then cover both bases.  Hello?  That is not useful to anyone.  Why does ZH post this kind of stuff?

Wed, 02/23/2011 - 10:29 | Link to Comment SheepDog-One
SheepDog-One's picture

We're supposed to believe there still is a stock market. Its cost many trillions to get equities up about 5% higher than 1999, pathetic, while the illusion is stock are on fire.

This is all nothing but a joke.

Wed, 02/23/2011 - 12:24 | Link to Comment dark pools of soros
dark pools of soros's picture

they mineaswell be predicting weather on the moon ...  who cares?

Wed, 02/23/2011 - 10:17 | Link to Comment monopoly
monopoly's picture

Patience, it will work out. This is not a 2 week investment for us. Just feel comfortable that you have protection against the inmates.

Wed, 02/23/2011 - 10:19 | Link to Comment cdude
cdude's picture

"But too many hedge fund managers and other traders have been waiting for a big dump to make their year, which means the big dump is suddenly less likely."

A near perfect setup for a short squeeze at the dma 50

Wed, 02/23/2011 - 10:31 | Link to Comment LongSoupLine
LongSoupLine's picture

lovin' the avatar cdude.  Bill is an all time fav of mine.

Wed, 02/23/2011 - 10:58 | Link to Comment cdude
cdude's picture

To these Bankster markets, I say: "aack!" and drop a hairball at their feet.

Wed, 02/23/2011 - 10:21 | Link to Comment DonnieD
DonnieD's picture

It's QE vs. a megaphone pattern in the dollar. A classic fundamentals vs. technicals matchup. I have Desperate Ben at -220 in this one.

Wed, 02/23/2011 - 10:23 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

bottom line: those cocksuckers who put this market on meth have no choice but to continue this charade and you know they wont "let the deal go down....no...no!"

Wed, 02/23/2011 - 10:23 | Link to Comment HedgeFundLIVE
HedgeFundLIVE's picture

we believe the retrace will last for at least 10 trading sessions: 

http://www.hedgefundlive.com/blog/bulls-beware-today-was-a-very-rare-atypical-day

Wed, 02/23/2011 - 10:27 | Link to Comment LongSoupLine
LongSoupLine's picture

nice stats/odds

Wed, 02/23/2011 - 10:25 | Link to Comment ak_khanna
ak_khanna's picture

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.

The markets will fall only when the banksters have eliminated all the short positions and only they themselves have positioned themselves to profit when the market falls
OR
When an unexpected world event catches the banksters with their pants down and the softwares they use to rig the markets go berserk beyond their control.

http://www.marketoracle.co.uk/Article24581.html

Wed, 02/23/2011 - 10:28 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

I'm feeling this right here.

Wed, 02/23/2011 - 10:26 | Link to Comment fragrantdingleberry
fragrantdingleberry's picture

As always, these are just the ramblings of an amateur observer, and do not constitute advice nor are they intended as advice--please read the HUGE GIANT BIG FAT DISCLAIMER below for more.

 

i don't see no stinkin disclaimer. 

Wed, 02/23/2011 - 10:53 | Link to Comment gmrpeabody
gmrpeabody's picture

Disclaimer..., we don't need no stinkin disclaimer.

Wed, 02/23/2011 - 10:26 | Link to Comment SheepDog-One
SheepDog-One's picture

No one cares about stocks anymore, its a joke.

Wed, 02/23/2011 - 10:26 | Link to Comment umop episdn
umop episdn's picture

The market will take a dump when its owners want it to. Prolly just in time to make QE3 politically feasable.

Wed, 02/23/2011 - 10:26 | Link to Comment Theta_Burn
Theta_Burn's picture

Careful...with all this "evolution" going on, the perfect setup to let this fucker blow off a bit more pressure.

Prefect excuse for the The powers that flee"

Wed, 02/23/2011 - 10:28 | Link to Comment LawsofPhysics
LawsofPhysics's picture

The public markets will soon mean nothing.  It is and will always be about purchasing power.  This will be especially true when black market capital flows are 1000 times that of the public sham markets.

Wed, 02/23/2011 - 10:29 | Link to Comment snowball777
snowball777's picture

Look, Ma: No Margins!

http://bit.ly/eVU5th

Wed, 02/23/2011 - 10:33 | Link to Comment LawsofPhysics
LawsofPhysics's picture

+100 trillion derivatives, but way too intellectual for the average blogger.

Wed, 02/23/2011 - 12:28 | Link to Comment Urban Roman
Urban Roman's picture

blockheads

Wed, 02/23/2011 - 10:30 | Link to Comment treemagnet
treemagnet's picture

Don't agree with the author.  The mechanics of the credit-induced, fractional reserve system on borrowed time goosed by a madman with rioting inmates in charge of polictics guarantees an implosion or nine.  Margin compression is the keystone.  Traders and hedge funds won't/don't matter these days as the author suggests.  500 trillion of derivatives interlaced throughout the world make the first domino as significant, maybe more so, than the last.

Wed, 02/23/2011 - 10:32 | Link to Comment Oh regional Indian
Oh regional Indian's picture

It's not time for the great equity puke yet. That will take a major event at home. That is the only way PTB will be able to justify all the rule changes made on the fly but ready for years in the wings, to make an even smaller sub-set of theirs whole again. 

Wash, rinse, reduce. Everything heading into a singularity.

But this week is not it. BDI has not hit three figures yet. Will all that sudden, new floating storage tanker demand keep it up for a bit? Maybe.

But it's weeks now. No going back till the pressure causes a blow-out though.

ORI

http://aadivaahan.wordpress.com/2011/02/23/ihumor-for-un-funny-days/

Wed, 02/23/2011 - 10:34 | Link to Comment chistletoe
chistletoe's picture

apparently, some people still have not watched the fuckin cartoon.

 

BTFD, morons.

Its different this time.

The market is going to rise forever,

at least until it requires a whole wheelbarrow full of stocks

to buy a loaf of bread ....

Wed, 02/23/2011 - 10:40 | Link to Comment UninterestedObserver
UninterestedObserver's picture

Maybe -but $100+ oil will keep money flows away from risk assets IMO

Wed, 02/23/2011 - 10:42 | Link to Comment UninterestedObserver
UninterestedObserver's picture

Except Apple of course - World War III? Buy AAPL! wtf

Wed, 02/23/2011 - 10:53 | Link to Comment UninterestedObserver
UninterestedObserver's picture

dup

Wed, 02/23/2011 - 10:42 | Link to Comment spanish inquisition
spanish inquisition's picture

My general attitude is that technicals levels are being set by the Fed and they know a correction is needed. Preferably they would like to see 13-14K before a correction to protect the ownership on the downside. Once that is met, it is off to the races again. Speed bumps on the way are world events and the treasury cap. If needed, they will use a +10% correction to make their point with the polititians to raise the ceiling. If that does not work, some of the holdouts will get personalized manila folders on the benefits of Obama's Patriot Act extension. That ought a do the trick.....

Wed, 02/23/2011 - 10:46 | Link to Comment SheepDog-One
SheepDog-One's picture

Equities are pathetic, up an adjusted 5% or so since 1999, and its cost the taxpayer many trillions just to do that. Forget equities, stocks are dead.

Wed, 02/23/2011 - 10:44 | Link to Comment MolotovCockhead
MolotovCockhead's picture

Anybody got tips on how to interprete heavily manipulated charts?

Wed, 02/23/2011 - 10:47 | Link to Comment UninterestedObserver
UninterestedObserver's picture

Print them out, light them on fire and then piss on it - usually gives me a good reading

Wed, 02/23/2011 - 10:56 | Link to Comment DonnieD
DonnieD's picture

go all in on the bearded bastard and then go do something productive with your life.

Wed, 02/23/2011 - 11:03 | Link to Comment buzzsaw99
buzzsaw99's picture

the bernank

that is all

Wed, 02/23/2011 - 11:15 | Link to Comment max2205
max2205's picture

Megaphone....nope < is what a megaphone looks like

Wed, 02/23/2011 - 11:41 | Link to Comment dcb
dcb's picture

does anyone besides myse3lf plot out the s and p using speed lines. I don't know I find it rather easy using this. Am I alone?

it makes todays low a temp low, of course nobody knows, but worth shot by this

Wed, 02/23/2011 - 11:44 | Link to Comment Fercho
Fercho's picture

I don't buy it!

The corpse is rotting. And no ammount of makeup will make it look good for much longer. We are going dooooooooooooown!

Wed, 02/23/2011 - 12:19 | Link to Comment dark pools of soros
dark pools of soros's picture

the only bears left are doing cartoons about silver..  who has shorts in this market?

Wed, 02/23/2011 - 13:53 | Link to Comment sellstop
sellstop's picture

Thanks for that article, Charles.

Yes, the reaction is always the clue to the strength of the initial move.

And tops and bottoms are a process.

I takes time to change the mindset of the people in the markets.

IMHO.

gh

Wed, 02/23/2011 - 14:14 | Link to Comment MarcusAurelius
MarcusAurelius's picture

Did you see this to confirm your theories?

http://www.distressedvolatility.com/2011/02/tom-demark-predicts-112-168-...

Do you know from right here on zero hedge that quite simply there are not many sellers left. When everyone jumps in to sell that is not the time the markets plunge. Just the opposite. That is what has been keeping them up. Now with no sellers left after innumerable short squeezes we should see a nice sustained fall just about the time the retailers head to the ramp to load up the truck. I shorted last night's NASDAQ and have booked 27 points. The HFT bulls of course will be buying all the way down so that we should have a real nice fall. This is what happens when you try to ward off true corrections and stall the inevitable. I am not saying this is going to plunge but we are certainly going to do what Tom D. says and perhps more.

Wed, 02/23/2011 - 16:47 | Link to Comment Joe Sixpack
Joe Sixpack's picture

WFTR? I thought it was BTFD?

 

GSUS

Tue, 03/01/2011 - 19:31 | Link to Comment Geoff-UK
Geoff-UK's picture

Please, for fuck's sakes, stop posting shit from Charles Hugh Smith.

Do NOT follow this link or you will be banned from the site!