One could note an apparent disjoint between EUR/USD and Dow, but one could note as well, possible signs of a new rise which existed in certain perspectives on Dow chart. Once could perhaps use this as a way of looking at long term directionality. If a market rises, despite continuous suspicions of a fall, that is, if it is not rising on exuberance 'it cannot fall' - but 'it can fall' then why is it rising.
What I mean is, how is a market which looks like a strong rising market, producing reactions such that it is a retracing cyclical, value cut, bear market.
Well, we could say that given the events of the crisis, that what the actual valuations are, may have become less urgent, if I may put it like that. That is, the valuations are in some sense, free floating, at least for a time. Thus, they float where they want.
However, all that then needs to be done, is to make sure they float in the right direction, or simply for it to be the case that they float in the right direction. If we look at some comments made on this site, we could note that at some point, forex pairs can detach themselves from the great stream of their valuation continuity, if such a thing exists.
This is perhaps a consequence of hitting high valuations, historically, there is just a value limit, at a given point. That is, the valuations still have the same force, for a time, that drove them up, and that may be a lot of force, but they move sideways, in a certain episodic way - structure reflects structure, all the way down, perhaps.
So can we see a market where underlying sideways directionality is expressed as upward directionality (and the reverse, those destabilized tops that come off floor based rises). Can we see signs of this at a small scale, or more interestingly, signs of sustainability - that is we look for that +bull, generating over time.
That is, such events do not necessarily mean deterministic decay of some kind, it could mean adaptation. It may come down to the normal reasons a great trend ends, possibly. These tend to become unstuck, in some way (not necessarily because they have hit some hard value limit, in fact such events seem to be able to power them), but what if they are already unstuck.
Bounce (1) -> revaluation (2) -> directional climb (3) -> bounce (4). With some other ingredients added, to help focus on part three. At worst could we see a reduction of part three, for a time, assuming that the context this is taking place remains stable (this was not the case, but has this changed).
Again, there is surely underlying strength, in what may seem like a new economy (which is important, especially as it seems to be having fruition) and there is that ingredient of a determinism in the Dow to rise. Even if this is being pushed to some extent, one might see something there to flicker in and out of valuations, as it were, even before its time. Such activity may even be necessary for its time. Note though, the global bounce fades, but because it is so deep, it may continue for longer.
However note, again its valuations may not have been entirely incorrect, in a real sense. That said, touching on real valuations may just be a part of the movement of valuations. Which gives a certain functional perspective to bounces. Irrational all the way, except for...and thus rational, over time. However rationality tends to be a little bit like this, does it not.
