The term for Leg meaning to step, so another step lower….
This is all straightforward enough. Money flows are good, just not right. OBV has been stuck since December and a break of that red trend line would probably be cause for a good rally. A/D or the always money, is surging and carrying this market on the back of an irresistible force, trying to move the immovable object. From a Fed Reserve Market managers point of view you really want money supply to be strong when selling takes over market psychology and we have had both (selling and strong money flows on the long term duration). For all the talk about tightening, none of it is showing up. That can’t surprise anyone with two synapses to rub together.
Where would the market be IF the Fed had really leaned into the inflation data with some rate hikes? They want the market to get on a bullish track, so they can raise rates… First it was Republicans scuttling the BBB, and now it’s Russia tossing around idol threats. (Very Trumpian those idle threats) The real psychology in here has to do with the descending price action chasing the golden trend line which we broke (reluctantly mind you) about a month ago.
The possibility of price catching that trend line is zero, and it has the awkward character of a dog chasing a car. Should the dog catch the car, disaster. The car is really too fast, eventually the dog gets tired, and then one of two things happens, the dog goes home, tired, or he wanders out into the street and another car hits him.
Dogs do not perform well in traffic. The Dog chasing Car mantra provides for exhaustion, a lot of danger, and perhaps some capitulation. Dogs who chase cars seldom change their ways. Buying the dip here might be injurious to your financial health. Lets be direct, this is a purely psychological problem – the money flows will continue in their own way, without any effect on the outcome.
Such is the manner of the action in the A/D in the 2020 drop. It participated in the drop for awhile and then resumed higher, while the dog continued chasing the car. The chimera then was all about Covid wrecking the economy (a powerful narrative) Here the competing narrative might be Russia spreading out a barrage of tactical nuclear weapons to cover it’s retreat. That could escalate to something bigger, and more strategic. The world has never seen a war of tactical nukes. It’s really up to American intel to pull the pin on this guy before he has a chance to do something. (That’s the consensus)
Yesterday was one more Easter without Jesus, so you’re on your own, stock up on iodine pills and tinfoil. One senses a crack in the global psyche.