Slowly We Turned
A Three Stooges Niagara Falls Theme
I want to begin by congratulating Google and Microsoft for besting their reduced earnings estimates. It took a lot of “guidance” for the street to get those earnings numbers right where they needed to be. Given how many revisions were made over the last 90 days, beating numbers in a declining environment is meaningless to most investors but to those unfamiliar with how the major brokerage firms operate well, the after hours bounce was appreciated.
Over the last few weeks what is known as a “topping dome” pattern has become more and more evident, especially in the S&P and Russell. We watch the Russell as it usually leads the way. Last week the Russell caught our attention when it moved higher but in the end, one day’s movement does not make for a trend. Decreasing volume and short open interest does. Nothing has really changed; without an “out-of-nowhere” event this market goes lower.
US 500 Cash - Daily
Russell 2000 Index - Daily
What did catch our attention was the DAX. Quite frankly it surprised me to find the DAX challenging its highs. How did that happen given increased interest rates and difficulties in the banking system? I thought only the United States markets knew how to use “smoke and mirrors” to disguise inherent problems. I was wrong.
With this in mind we took a closer look at the weekly and monthly charts for the DAX and it seems more likely than not it’s just putting in a traditional double top. Our analysis is preliminary, still have to check out the trending open interest and a few more bits and pieces of data that we follow but thought a heads up was in order. Given the Dollar was down against the Yen today but up against the Euro and the Pound I think we’re on the right track. Check back on Sunday night when we look back on last week and analyze what’s expected next week.
DAX - Weekly
DAX - Monthly
Hope you enjoyed this post. I’m just a young 68 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s in my head. It’s not always pretty but it’s based on history . . . and history, unchecked, repeats itself.
Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at dzimmer@substack.com so we can further help.
Do any of you remember The Three Stooges? One of my favorite skits they did was titled “Niagara Falls - Slowly We Turned” and that’s what’s happening here. In any case it’s funny; hope you enjoy, I did . . . damn I’m getting old.