Well, we enjoyed a few weeks of respite to end 2015 before being thrust headlong right back into the shit. The first week of the year has been absolutely horrendous. Do you know what is worse than a huge gap down? A huge gap up that reverses and closes on the lows. The suck level is even higher when it happens into the weekend.
Six months ago you could hope China would manipulate us on a Saturday and next week would open and rip higher. However China can no longer stimulate. They broke their stock market. Idiots are now on a crash course. We are on our own to sort this out. Meanwhile The Fed is completely detached from the financial markets and only interested in working borrowing rates higher.
That means this downside action is likely to carry into Monday. Auction theory context calls for it, so does Macke.
If there is one positive occurrence during this latest market rout, it is the gap fill we saw on the PHLX Semiconductor index. Its never good to leave a gap behind and that is exactly what we did back on October 2nd. Well, we filled it today, so there’s one less thing to worry about:
