The market giveth, the market taketh

Stock indexes were hit hard again today with the major indexes giving up all or some of the gains from Thursday. Grains exploded higher on crop news and helpd fuel the continued rally in gold despite falling crude and a flat dollar.
The Baltic Dry Index has made a 50% correction of the last impulse wave up, so far. It looks like it wants to correct the entire move. I remember a CEO of the biggest dry shipping company on CNBC at exactly the top tick of this index forecasting much higher rates. This chart shows the real picture. There is no opinion. Just the facts. Now they are putting on grain and gold “experts” all saying those markets are just getting started to the upside. Just getting started? They’ve all had huge price moves. The “experts” in gold and grains were not to be seen when those markets were at bargain prices. CNBC and the financial publishers are the best contrary indicator out there. This index might be a prelude to a significant down-move in the high flying Chinese stocks as well as other emerging markets. Some of the move up was attributed to the falling dollar, as this index is quoted in dollars. However, the fall is not entirely the result of a strong dollar as the dollar is still in a downtrend, although there was a small counter-trend rally in December. Still this index shows more weakness than what could be attributed to that small dollar rally. If the dollar does rally for real then look out below for this index. Most analysts say the dollar will keep declining, especially now, since Uncle Ben has indicated much more aggressive interest rate cuts ahead. But what if the dollar doesn’t go down in the face of rate cuts. How could that be? The dollar is already stronger against the British Pound as the BofE might be forced to cut rates more aggressively than in the US. Rate cutting could spread throughout Europe, so the dollar could go up if the US cuts rates, but less so than other countries. With talk of recession and if the dollar increase, I don’t see how gold can hold up at these levels. It look technically strong after breaking out of that triangle. I can’t find the logic when financial reporters quote the gold price and say it was up on recession concerns. That makes no sense. Gold is probably in a multi-year bull market, but there could be some nasty downside coming if the dollar rallies, and especially if the US goes into a recession, which looks almost certain. But what do I know. I just read the tea leaves on the charts. Figuring out the logic does little good when all that matters is the price action.
The S&P was down today, but was able to recover enough to close right on the three day pivot, which is sort of a balance point. You can see on the candle today that there was a tail on both ends, with a close relatively close to the open. Momentum stays up, and overall trend remains down. There seems to be a tug-o-war between bottom pickers and those who want out of this market. The resolution so far seems to be a point of balance, or the market trying both sides and then finally just sitting on the fence. I have no clue or opinion. Some more downside work with momentum divergences would be constructive longer term. I though there would be a bit more upside and then a good shorting location, but that doesn’t seem to be forthcoming. The Dow was slightly worse to the downside, with the Nasdaq getting hit the hardest. But charts look similar with the rejection tails left on the bars from Wednesday still holding on all the major indexes.

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