The market could have called the bluff of the Fed game last night. We usually get a market rally when there is a big miss on the NFP like we got last night on expectations that the Fed will cave in and end the taper. There was an initial rally on the bad news but as soon as the markets opened they hit the sell button.
I have been watching this NASDAQ trend like a hawk and last night we got a failure of that long term trend line. I have been saying that the Fed is playing a dangerous game of holding out the carrot of more QE and then pulling it away again. I said that I don't think the Fed will reverse the taper until there is a significant correction in the market by at least 20% to 30%. Well now it looks like we are going to see a good size correction. Nobody want's to be the eighth person out of a plane with only with only seven parachutes.
Click on chart to enlarge
Below: NSDAQ daily chart showing a break of the L/T uptrend. This is not a confirmed reversal yet but it looks like an early warning signal is in place. We need to see a followup in the selling in the week ahead.
Below: DJIA daily chart showing a double head resistance.
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