by Chris Becker
So here we go, the third week of the trading year and volatility is again expected to rule over the “normal” rational way of things, but this time on the upside with a big spike on Wall Street on Friday night following a very ebullient Asian session. Is this the end of the selling? Maybe – as you’ll see in the charts below, all the indicators are pointing to a bear market rally, but experience tells me it could be short lived, even if the magnitude equals “a new bull market” – i.e 20% from the lows. Don’t confuse this ridiculous headline measure with a proper structural and technical view of the market. In every major downturn ever recorded, prices rallied 20% or more before crushing to new lows. Be warned.
Recapping Asia’s Friday where the Shanghai Composite finally rebounded, lifting 1.25% off a tentative support/bottom line at 2900 points. While the daily downtrend line has not been broken to the upside, a potential long swing is brewing here as other risk markets might lead instead of following the rigged bourse in the week ahead:
