Charts and Commentary
Last week, I told our paid subscribers that the Institutions were doing hedged buys while their sell-trend was still in place. I said that this was a non-commitment like having "one toe in the water, and one toe out" indicating that they had no idea what Bernanke was going to do on Tuesday.
This non-commitment showed up on Friday as seen on the 1 minute chart below. Note how the DOW first sky rocketed up on the Jobs Report, and then dropped all day long into a loss, and then in the last half hour, it retraced to the previous day's close. The bulls and bears are still split about equal.
The consensus of what Bernanke will do is pretty much 50/50. That means half the investors are going to be happy with what he says, and half will be upset by being and be on the wrong side of the market. Bernanke's Tuesday decision is going to be the most important Fed statement this year.
Many market pit traders believe that the market is oversold and due for a rally, and many were thinking that the DOW has had its rally and was now done after Friday's action.
This just shows you how indecisive everyone is as we approach Tuesday's interest rate decision. But, Institutions haven't been so indecisive ...
Below is our chart showing the trend of their selling. Note that in May, their selling broke its trend resistance to the upside and the correction began.
As we start the week, that trend is still negative with the selling activity above its support line. At the same time, they have been doing some buying, but it has been hedged-buying in case Bernanke announces disappointing news.
Don't be aggressive and try to guess what Bernanke is going to do. Yes, you have a 50/50 chance of being right, but you also have a 50/50 chance of being wrong. This is just one of those times that it is smarter to just "wait and see" what happens.
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