20DMF

[Pascal]

Still looks negative

pascal

14487

[brrim]

Pascal; Nonetheless we are setting up a major positive divergence between 20 DMF and price. Closing 20 DMF on 5/18 was -1.238% with a IWM close of 74.69. 20 DMF is now -0.49% with IWM at 74.03.
Best regards,
Robert

[Pascal]

Pascal; Nonetheless we are setting up a major positive divergence between 20 DMF and price. Closing 20 DMF on 5/18 was -1.238% with a IWM close of 74.69. 20 DMF is now -0.49% with IWM at 74.03.
Best regards,
Robert

Robert,


This is a good observation, but you need to put this in context.
The 20DMF shows what large players are doing.
From May 18, we had an oversold bounce: short traders started covering in a rather coordinated way. The price started to move up, but then stalled.

This morning, the jobs report was very negative and we are now seeing large players "giving-up." I believe that the situation is now different from the oversold bounce situation of ten days ago. Therefore, a comparison is risky. This means that we could have even more divergence from here.

The bounce of gold indicates that the market expects QE3 fast now. Will the FED oblige or will it not? Will the market have to fall more before having politicians begging to the FED? This is my opinion.


Pascal

[brrim]

Pascal; Thank you for your perspective. Very helpful.
Robert