Magna Carta Wednesday, page-3

Tuesday Evening Liqueurs. 14 June, 2016.

XJO down today -2.06%. That's clearly a devastating result.

Here's the chart for STW, the tracking ETF for XJO:



STW had a big gap down at the opening, and then selling continued for the rest of the day.

It was so bad today, that one has to wonder if this is not a capitulation move.

Maybe. But probably not enough time has elapsed yet for a bottom to be declared.

CCI was down to 252. Below 200 is a fairly extreme move. But not necessarily a bottom. We might have to see below 300 or a positive divergence set up to be convinced that this is a bottom.

Vix rose sharply today. That is something of an understatement. Vix shot up more than 22% today. I haven't been collecting Vix data for all that long. My records only go back to November, 2014. But that's the biggest rise by far in the Vix in that period of time.

That might represent a seismic shift in market sentiment. Or, maybe, it's an indication that fear is so high that the bear side is now so overloaded that a move up is a sure bet. But, until we see a clear shift in the trend to the upside, we have to assume that the bears are well in control, and we will see more downside.
Just don't be wedded to the bear side in this campaign. Things currently look really bad - and could get worse. But - they might also turn around very quickly.

The Federal Reserve decision Wednesday (NY time) could be a catalyst for further sharp moves either up or down.

Australia, meantime, is mired in a seemingly unending election morass of claims and counter-claims from the two major parties. Each side is supported by a stream of statistics, rhetoric and negativity (about the other). Do we have an Einstein or a Newton among us to make sense of all of this? I doubt it. So uncertainty will cast a pall over our market and make any upside a doubtful proposition until this long, long election campaign is over.

I hate elections.



RB