The Very Short-term Mirrors Short-Term and Intermediate-term Conditions

Wednesday’s engulfing candle in the 30 minute time frame needs to be confirmed (a close below 2,036.72) for price to begin a retest of support.  Thursday’s opening range is so far a bullish rebuke, encouraging bulls who see this as a setup for the next rally above 2,089.70.  We get the sense that the very short-term mirrors the short-term and intermediate-term condition. 

Wonky Wednesday

Above 40,000 feet, we can begin to see the curvature of the earth and gain a better sense of the interconnected whole.  A standout feature from this vista is that though their paths may change sometimes, rivers always reach the sea*.   We use this analogy to view the impact of central bank policy on the markets, starting with currencies. 

Oil, Equities, and Leverage

A quick note on yesterday’s drop in the markets and our short-term outlook:

The focal point is oil, which appears to be nearly through in its correction, with each successive decline impacting other markets due to leverage, and to a lesser extent supply/demand.  Investors should keep in mind that refineries have little interest in taking in significant new inventories of crude at present, due to seasonality.