Just what is the Kansas City Shuffle? Really? REALLY?? Oh, you never saw the movie. Wow, so sorry to hear that. You missed a great movie! The title? No, it's not a typo. The title is actually "Lucky Number Slevin". It is one of the best movies of the decade and filled with stars old and new. Bruce Willis, Josh Harnett, Sir Ben Kingsley, Morgan Freeman, Lucy Liu. If you missed this movie, get it and watch it. It is a great movie with some of the best dialog I have ever heard!!
Ok, ok, ok. Back to business. The Kansas City Shuffle is simply this.......
They look right, and you........look left!!
Links:
Movie Trailer
Movie Clip defining the Kansas City Shuffle
The Song "Kansas City Shuffle"
This past week it seems everone was shuffling, Kansas City Style. Up, down, pullback, month-end window dressing, consolidating, month-end dumping for profits, etc. etc. And most got it WRONG! You see my loyal followers, the pundits and media maniacs have become so damned myopic in their view of the market that they cannot see past the next 5 minutes!! And who can blame them? After last year's news filled drama and volatility it's no surprise.
But last year the VIX was up in the 30's and 40's!! Outrageous volatility! And as we know (we do know this.....yes?) when the VIX is under 20, and especially under 18, investor confidence is high and volatility is in a normal range. The fear in the market is not rampant. And it is fear that causes volatility. The VIX this week has been at a low of 14.14 and a high of 17.27.
Additionally we have learned that five minutes does not a market make. Rather let's look at the daily chart and how it fits into the three day chart, and how the three day chart fits into the weekly chart. One can even look at how the weekly chart fits into the monthly chart. Look at the relationships between them. Compare. Think. Reason.
Let's take a step back and look at the forest, not just one tree.
This week I heard the talking heads say.......
It's a forest of disaster tress and the market will collapse soon!
No, it's a market of up trees and the market is moving parabolically upward.
Nah, it's a forest of bad European trees.
No way, it is a forest of "the rally is over" trees.
It's a market of .......oh hell, you get my drift. Remember the three blind men describing an elephant? None of them were right and yet all of them were just stating their point of view.
So what's the real deal? Let's look at the charts! DUH!! Take a minute and review the charts below. Think for yourself. What do you see? What conclusions do you draw? What is price doing? Volume? Were do you think the market is heading? Think. Ponder.
Then, and only then, read my conclusion below the charts. Remember, always think for yourself first! That is the MOST important lesson of the markets. Yes, I went just a wee bit crazy with the charts! But only so you'll wait before scrolling down for my thoughts.
Did you take a minute to think for yourself? Or are you cheating yourslef and letting someone else think for you? Remember the old quote......Fish for a man and feed him for a day. Teach hime to fish and feed him for a lifetime.
I gave you enough annotation on the charts that you should already know my thoughts. But here's my take and the Trends anyhow.
I see the following on the charts.......
1- The VIX is under 18.
2. The uptrend line on the DIA daily chart has been tested and survived.
3. Price is still above the 20 EMA.
4. Price is still above the 50 SMA.
5. We've been bouncing sideways the last 13 days between 132.50 and 130
6. Volume is on a slight decline, but the buyers have remained in control.
7. The SPY looks stronger than the DIA
8. The QQQ's are running faster than the SPY (perhaps too fast?)
9. The Russell 3000 looks similar to the SPY.
Everything points to only one conclusion for me. The rally is intact. How long it will last is anyone's
guess. And with this last weeks consolidation, it only makes sense to pay closer attention to the charts
in the coming weeks. But let's not be Chicken Little. Things are looking good. And while some pundits
are predicting the upcoming earnings season will be weak, we'll have to wait and see. Just like life. For
now, everything is up. So be attentive, watch your stops as usual, dump any losers, and add to winners
on pullbacks.
CURRENT MARKET TRENDS
Short Term (Daily Chart) – Consolidating with UP Bias
Medium Term (3 day chart) – Consolidating with UP Bias
Long Term (Weekly Chart) – Consolidating with UP Bias
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