Let Me Tell You a Couple of Three Things

Dow component and retail titan, Nike, below on the daily chart, is gapping up hard after earnings last evening. And just like with Disney, another Dow component, which gapped up in August after earnings, it would not shock be if all of the bullish cheers will soon be silenced again. 

Back on August 10th, Disney gapped up on earnings to a chorus of cheers and self-appointed victory laps by bottom-callers who were cocksure that the big, bad, Disney bottom was in. After all, they said, you always buy DIS on the dip. 

Since then, the stock is a good 10-15% off those highs with not much buying conviction actually showing up on the charts. 

But beyond Disney and Nike, this issue raises one of the pertinent concepts to the current market which many traders either are unaware of or have forgotten/dismissed: Exuberant relief rallies in the context of downtrending charts are the rule, not the exception. And also as a rule, they more often than not do not mark durable bottoms. 

During the QE/ZIRP/pandemic era of money-printing galore, these lessons were cast aside as old hat and obsolete. But even a rudimentary study of the history of markets, predating the Dow and looking at other countries like those in Europe centuries ago, clearly illustrates that each and every time bankers and traders think they are smart enough to supersede the business cycle and that the market has grown so efficient as to never go down again, we do just that and go down. 

Disney has not bottomed, and neither has Nike. The Dow is struggling at its 200-day simple moving average this morning amid what many are expecting to be a slam-dunk Q4 rally. 

As usual of late, I am the lone wolf on the other side of that trade. 

You want compromise? I don't think so this time.