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A few days ago, I read a premium article over on ZeroHedge which went into great detail as to why the three components of what I call the Fed Spread – – most in particularly, the balance sheet – – which render all the Q.T. the Fed is doing moot. In other words, by their arguments, the market was going to roar higher this year anyway. I confess, I felt pretty empty-headed reading the article, because it didn’t really sink in, although it was enough to strike fear into this bear’s heart.
I was reminded of this just now, since it looks like our predictor of near-term S&P prices enjoyed a rise. It’s still beneath present price levels, but the gap is definitely getting smaller. Here are the three individual elements:
Bonds have had a staggering recovery over the past couple of months, as rapidly-ascending interest rates stopped in their tracks and started retreating. As I look at interest-sensitive charts, however, I have to wonder if the world of bonds is going to start a new leg down. Here is EMB (emerging markets bonds):
It’s always amusing to me when a stock skyrockets on word that the company’s CEO is departing. It must be bittersweet for the guy, because he sees his wealth roaring higher while at the same time the planet is celebrating his departure. In any case, NFLX earnings are out, and the market doesn’t seem to know quite what to do with the information yet. I have no position, so I’m just an amused bystander.
Does it feel like the market is stuck? Like it’s in even more than a tug-of-war than usual? I think so. And I think I know why. Take a look at this /ES chart going back for years. Take particular note of those Fibonacci Retracement levels.