A week ago trading was about trend continuation. At least I saw it that way and I could see markets breaking thru marking this bull trend as intact. The entire last week markets were confirming my assumptions and all my accounts were growing. It was a filthy grow and I made quite nice cash.
Well, until Friday. Friday’s trading erased all my gains for the week and put back a question about the future of this trend. Although from a long term perspective, we are still in a bull market and there are no signs of changes yet.
Although, technically, I cannot see any significant red flags signaling reversal in trend (except one on my side) I can see one change, which may end up as a game changer.
Today we received unemployment data and these reveal a few things. One, it shows how out of reality Janet Yellen is when a few weeks ago she claimed that FED would start raising interest rates in six months, later she denied it and today data indicates that economy is probably, really, improving a bit and that they may actually start raising the rates.
Two, you can see a significant change in investors behavior. In the past they were accustomed to rising markets. The whole 2013 markets were rallying and investors jumped in any dip on the way. A complacency has never been bigger. Today it all has changed and investors are panicking whenever they see s slight dip or selling. They are afraid that markets are so extended than they no longer take a dip but run away. And that may be a significant change.
The result of this is a sideways market with last week attempt broken. Will today’s selling spark a broad sell off or is this just a blip and we are seeing a consolidation? What do you think?