Wednesday, January 31, 2018

The State Of The Reversal Of Fortune

The tax cut melt-up has lost its mojo...

The shelf-life of each overnight rally is getting shorter and shorter. At some point Skynet is going to figure out the trend is now down.

Any questions?

Skynet is working double overtime to keep this clown show from imploding, but the algos are not getting any help these days from gamblers. A key "feature" of the January melt-up was the daily overnight gap up open, with the casino closing on the highs. How better to force everyone and their dog to chase the market? The tail was wagging the dog, indeed. 

Nevertheless, starting last week, those gap opens were closing on the lows, or flat, like today.

Which is why Money Flow has rolled over:

In other words, there is no longer any momentum in Skynet's momentum ignition routine. The dog is now wagging the tail again. 

Here is why...
Below is the January melt-up which peaked last Friday. New highs - lows are in the lower pane:

Zooming out to the daily scale, gives us this view.

New highs - new lows are back to where they were two years ago in February 2016. And yet the casino is STILL record overbought:

The gift of overnight gaps is starting to go in reverse now as up gaps alternate with chasmic down gaps:

Given the precarious state of new highs, Amazon's key reversal today was not what Skynet needed...