Bounces Hard from the 50-Day EMA

In the meantime, it looks like Wall Street traders are still out there pushing narratives, and therefore they will continue to see buyers jump in on any dip.

The Dow Jones Industrial Average has fallen initially during the trading session on Wednesday as traders started to focus on multiple negative issues, including the fact that Microsoft had such a horrible guidance call. The Germans and Americans are now sending tanks to Ukraine, which can only make things better in that part of the world, and ensure that peace comes rushing toward us in our lifetime.

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Or, perhaps the markets were a bit confused as to how to take this type of information. Quite frankly, there are a lot of negative headlines out there, so I would expect to see these quick flashes quite often. The Dow Jones 30 tends to be a little bit more resilient than some of the other diseases, but right now looks as if we are forming some type of triangle pattern. This should not be surprising considering that we have a major Federal Reserve meeting next week, and a lot of people will be waiting to see if Uncle Jerome gives them some type of hope for loose monetary policy. After all, for the last 15 years, the markets have been completely distorted by liquidity, so that’s almost traders know. Corporate earnings are talked about on the financial channels, but at the end of the day, they don’t really matter.

Wall Street Traders Continue Pushing Narratives

• However, that might be changing. If liquidity goes away, then a lot of the so-called “zombie companies” in the United States would have to earn a profit. If that’s going to be the case, it’ll be interesting to see how that plays out.
• In the meantime, it looks like Wall Street traders are still out there pushing narratives, and therefore they will continue to see buyers jump in on any dip.
• If we were to turn around and break down below the 50-Day EMA, we have the 200-Day EMA at the 33,000 level, sitting just below there that could come into the picture as well.

All this leads me to believe that we continue to chop back and forth between now and February 1 when we finally get a statement from the Federal Reserve. If we do get some type of massive sell-off, I anticipate that Wall Street will come up with some type of reason to read that statement as being dovish.