We not only told you so but we showed you!
That’s right – Last week (and what a great week it was!) we closed out a week of pattern watching with Friday’s “Pattern Recognition 101” class, where we put up the graph of THE FUTURE, which is actually a graph of the past but, since it accurately predicted our sharp recovery off Friday’s gap down open AND predicted the strong gap up this morning – perhaps we should take it seriously:
This is the HFT recovery program we call “Omega 3” at PSW that seems to be running as the markets move off the bottom (which we also predicted) of our long-standing trend lines. Today we are hopefully going to stick to the Feb 16th plan and finish just short of our breakup points so we can have a successful “Testy Tuesday” tomorrow. If you look over our SUPER BULLISH positions in the Weekly Wrap-Up, you can see how happy that will make us so keep in mind that we are unusually biased this week as our usually market neutral stance has tipped as bullish as it gets the past two weeks.
We’re just following through on my Friday morning game plan, where I said: “It will be kind of funny if we get that big gap down at the open and then recover to even to end the week right back in the middle of the low end of our range. I think I would have to go a bit bullish into the weekend if that’s the case!” Head bone-caster, David Fry, had this to say about the action that day:
There wasn’t really a story in markets Friday. The news items, mostly bad, didn’t register as such. The machines have things under control and spent the day cherry picking news they liked (slightly better Consumer Confidence) and ignoring news they didn’t (horrible Retail Sales data). Some, like permabulls at CNBC had to dream-up ways to rationalize poor Retail Sales against Consumer Confidence. Frankly, it’s a laughable exercise; but, they have soap to sell.
So when folks ask, “what moved markets today?” The only intelligent answer is “nothing” except perhaps some program trades, high frequency algos, trading desks and hedge funds. The rest of us are left to scratch our heads watching another end of day light volume jam job.
In fact, volume is roughly 30-40% below normal and this allows a few players with their HAL 9000s to manipulate prices all they want. The market now has become…
