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The story referenced in the title being whether or not global policy
makers can cook up an inflationary up phase in the global economy. I
had used the term ‘i2k12′ early last year referring to the prospects for
what might ultimately be an inflationary 2012. Well, they came with
the QE at year-end and now the theme shifts forward to the prospects for
A subscriber forwarded to me an audio of Don Coxe talking
about the changes coming out of Global Policy Central in “Basel
Greenlights Banks Big Time” and it turned out to be a good starter for a
post in which I would like to try to delineate some things.
You may have heard me belly ache in the past about the raving
inflation bulls who lump gold and gold stocks in with the entire
inflation trade? Gold is copper is oil is hogs?
If there's one chart that illustrates the strangehold the bulls have on the bears, it's the one below. The Russell 2000 is at a never-before-seen-in-history high. Higher than the NASDAQ bubble. Higher than the housing/credit bubble. Never. Ever. Higher.
I had hoped that the break of the extraordinary wedge pattern (highlighted in teal) would be similar in follow-up to what happened with the prior instance that I've shaded in green. Instead, the fall terminated abruptedly on October 4, 2011 and has been more or less pushing higher ever since.
HerbaLife spent the past couple of days zooming higher, thanks to the company's PR campaign and a pledge to buy back stock. I think this short is looking better than ever, and from a technical perspective, it's behaving very cleanly. That may sound strange for an HLF bear, but there you have it.
The retracement that I was talking about as likely yesterday morning seems to have started now, with ES at 1457.5 as I write. Daily middle bollinger band support on SPX is at 1443 now, but it's worth bearing in mind that the channel support trendline on the current SPX rising channel is currently in the 1415 area. As this retracement develops I'll be looking for a declining resistance trendline to form to help identify when the retracement finishes. Short term there is a double-top target on ES at 1453 and here is the updated rising channel on the SPX 60min chart: