Well, we finally got the pressure valve release to relinquish some of the overthrown overbought situation. Now what? Do they ramp it from here? Do the bears keep the ball for another 3 to 5%? All it took was for the Fed to mention the possibility of taking some easing off the table and POOF! the SPX fell 35 points in no time. Of course the Fed's good Dr. Bullard (or is that Bulltard?) comes to save the day this morning reminding us all the the "easy" money is here to say for a "long time", and the reversal is quelled in its tracks.
And there you have modern market theory in a nutshell, ease off - fail, ease on - ramp. There is nothing more to it than that. Should make for easy reading and workload in modern finance 101 classes. In fact they can probably start teaching that in an advance or AP class in 4th grade.Modern Finance 102 will be a bit more difficult - How to Bribe/Blackmail a Senator and Make Him Your Slave.
Off to the charts - to say we're at the edge of a major cliff would be an understatement.
Over bought and overthrowing are never a good combination. With negative Fed speak, the CONgress coming back in session to discuss the budget and all the other economic goodness going around the turbulence might just be getting started for the markets. We all know how this will end, 11th hour printfest, so no fears mate (till the bill comes due). It is all a dog and pony show to distract you from reality. About 5% of what you hear will be the truth. Bottom line as the charts will show is that we're at a very precarious point where the slightest slip and everything, I mean everything, falls off a cliff. The Fed sees this. the administration sees this. The whole globe is becoming aware of this. Thus printapalooza will go on unabated till they can't anymore, then we all burn in hell. Which I think is not too far off from now.
SPX Monthly - Looks like another bubble to me, and a debt/credit bubble will be far worse than the last two. Overthrowing negative diverging indicators is never a good thing.
Weekly SPX - The overthrow of the pink wedge, what I believe is the final formation of the recovery, is never a good thing. Over bought and overthrowing, again, are never good.
CPC - This is just sick.
SPX Bullish Percent - As the chart indicates a negative BP to price is historically a bad thing for markets - in this case, well, just look at the chart.
SPX to BDI - Yup, this recovery is swimming along nicely. The Global Ponzi system is DOA folks.
Gold futures - /YG - 1538 is critical support, but not really. I have speculated that everything sells off in the "great capitulation" and then the PM's see all the cash flow (physical not paper). Let it sell off, do not fret, it will only create better price, but you better be stocking up on physical cause the real gold rush is coming.
Silver futures - /SI - With gold silver is at a critical support level as well. Both have cracked the long term yellow support diagonal. now critical NT support is all that is left. They have either stretched the fall as far as possible or a real sell off (manufactured/manipulated by the Fed of course) is coming.
Copper Futures - /HG - The HnS almost measures perfectly to LT channel(green) support near $2 (that's TWO or almost a 50% haircut.
I could go deeper and should get into currencies, but we;ll save that for another post - is from the charts above you can't see the severe cliff we're facing ere you should really get some professional help.
Enjoy the weekend.
GL and GB!