Daily Archives: December 17, 2013

Taper!(?)

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It’s ‘taper’ talk time again and here is a post that is only too happy to join the cacophony…

Dear Federal Reserve, please signal what would be at least a symbolic gesture to the market and pretend to tighten policy by beginning a tapering of long-term bond buying. We know inflation is being promoted via ZIRP at the discount window and via money printing used for T bond and MBS asset purchases. (more…)

Opposing Trends

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Generally speaking, there are two trends happening in the market (we’ll set aside the fact that the long-term trend, going back five years now, is up………obviously). The intermediate-term trend is ascending, as illustrated below by the green tints. The market has, for months, moved on to higher highs. The short-term trend, however, is bearish – illustrated by the cyan tints – creating a petite descending channel. By the end of day tomorrow, we should know whether this short term trend has been thrown in the garbage, or if the intermediate trend has, in fact, been broken for good. (more…)

Samantha FXY

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The Japanese Government has been monkey-hammering its Yen into toilet-paper, and the chart below of FXY (highlighted by Ms. Fox, whom you children-of-the-80s will remember) shows that a double-bottom might be forming. I’m not going to bank on it myself, as the currency wars are in full swing, but I at least thought I’d share this.

1217-fxy

Hold or Fold?

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I often talk about the need, fairly early in any trend, to establish either a significant rising support trendline (in an uptrend) or a significant declining resistance trendline (in a downtrend). That is a key reason that I was looking for a strong rally here and I think those key trendlines have now been established on both SPX and RUT. The question now is whether those trendlines will hold or fold. If the downtrend is to continue then the RTH yesterday was the rally high and both SPX and RUT should turn down from there. If the downtrend is to break and open up a retest of the highs and a Santa Rally, then I’d expect those trendlines to break up today or tomorrow. (more…)