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Now That the Top is Complete 5/10/22

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Yesterday, May 9, 2022, a day that will live in infamy, the stock market broke down from a major top that has been 10 months in the making.

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This will get everyone beared up for the longer term, as it should. However, we here at the Stool focus only on today and the next 24 hours. So, now that sport has been crushed, leaving no doubt in the minds of true chartists that we've been in a bear market since January, what happens today? 

Do we get a bounce?Well, turns out we've already had a rally of 65 points off the overnight low. And they're back to resistance. 

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If they get through here, then this rally will persist for a while. Next stop 4050, 4060, or maybe even 4075. On the other hand, a rollover at 4035 would call for a test of 3965, and undoubtedly another rebound. The PPT and your tax dollars hard at work. 

I have an appointment with the goovernamont today. See you later! 

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For the big picture:

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We have a double bottom test here with a slightly higher low. This should stick for another pop. At least that's what probability says based on past history. 

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Thing is, markets crash when expected bottoms fail. I think the number to watch here is 3945. If it drops below that, open parachute. 

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Similarly, 2.90 is the key on the 10 year. If that holds, uptrend still intact. If it doesn't, we're in an intermediate term counter trend reaction. That's thanks in part to massive paydowns in the T-bills, currently at $101 billion so far this month. looks like they're on a schedule of paying down $36 billion a week. With $951 billion in the Treasury's bank account, they can sustain this for 18 weeks before reaching their maintenance level target of $650 billion.  

 

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29 minutes ago, DrStool said:

Thing is, markets crash when expected bottoms fail. I think the number to watch here is 3945. If it drops below that, open parachute. 

Strap on. 

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They say the Devils Tower was a giant  fast growing tree, in a Jack and the beanstalk sort of way, that a bear tried to climb to catch some kids, and left those claw marks.  Seem about as plausible as a group of people can control the economy with monetary policy.

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