Thursday Thrust – Weak Is The Word

Already a disappointing morning. 

We had a little move up in the Futures but it’s fading as the Dow is unable to get back over 15,500 (15,450 in the /YM Futures).  As you can see from Dave Fry’s chart, that 200 dma is turning into some nasty upside resistance and that is NOT a trend you want to see continuing into the close of the week (weak). 

 

Nonetheless, I just sent an Alert out to our Members to press a few of our positions in the Long-Term Portfolio and we’re going to balance that by shorting GMCR (see why here) off that silly pop on the KO news.  

The BOE held rates steady this morning and we expect the ECB to do the same but we are concerned by weakening German Manufacturing Orders, but, in the US, productivity gains will offset poor unemployment news so it’s going to be another day of waiting and seeing how our bounce levels do.  

 

As you can see from our Big Chart, we are down about 7.5% on our indexes and, according to the 5% Rule™, that means we need to see 1.5% gains just to make a weak bounce out of it.  1.5% is 231 Dow points (15,670), 26 S&P points (1,780), 60 Nasdaq points (4,075), 147 points on the NYSE (9,950) and 16 Russell points (1,110).  Those are just our WEAK bounce lines – the same lines that kept us from making a mistake by getting too bullish on the previous bounce – so take heed!

8:30 Update:  ECB held rates, as expected but Draghi actually mentioned GRADUALLY raising rates in the future and that was enough to send the Dollar down from 81.40 to 81 (0.5%) in seconds.  That shows us that the Dollar’s “strength” is a very fragile thing and it won’t take much for our currency to reprice down to Argentina-like levels if the rest of the World begins to tighten without us.  

Meanwhile, that’s certainly NOT happening at the moment as the BOE and ECB don’t see enough inflation to bother them (because we’re all exporting it to the 3rd World) and none of us have much of a recovery going, so all the Central Banksters are still saying they will remain “accomodative” for as long as it takes (for the top 1% to get the rest of the money).