Thursday, 30 January 2014

A second QE taper

With QE taper part'2 announced, it was a choppy day for US equities, with the sp -18pts @ 1774. The two leaders - Trans/R2K, settled lower by -1.2% and -1.4% respectively. Bear flags are developing on the daily cycles. The equity bull maniacs are in real trouble if market slips <sp'1765.

sp'weekly7 - bearish outlook

sp'weekly8 - bullish outlook


Things are very marginal right now. We're a mere 0.5% from breaking the key sp'1767/65 zone. Any daily close under that will open up a very fast and nasty move to the 1705/1680 zone - where the 200 day MA, and the lower weekly bollinger are lurking.

Baring a break <1767/65, my best guess...another push sp'1810/15 across the next few days. From there, I'd most certainly be seeking another rollover.

I have to note..weekly'8 was the original outlook - all the way back from last summer. If correct, it'd offer a further wave lower..but to be followed by one final lurch higher, into the 1880/1920 zone by late March/early April.

A hit of the lower weekly bollinger, and sp'1850 will be confirmed as a key intermediate wave'3 top. From that point, it gets 'relatively' easy for the doomer bears.

The 'top is in' scenario.

The following is especially posted for the remaining doomer bears out there. I think it merits at least a few minutes 'staring time'.


Essentially, I'd like to see a hit of the lower weekly bollinger - currently 1681 (rising 10/15pts each week), then a multi week bounce, concluded by a collapse wave - much like late July/August 2011. We can at least dream a little on this, yes?

Looking ahead

We have the usual jobless claims, and pending home sales. However,  most important, the first reading for US Q4 GDP. Market is expecting 3.0%, which seems a pretty bold target.

*next sig QE, is not until Friday, but that is a very heavy $5bn or so.

The second cut in QE

I had expected a reduction of $10bn was kinda pleasing to get that right. Obviously..the next thought was..'Will they cut another 10bn at the FOMC of March 19?'

One view that many had last year - myself included, was that the Fed would eventually reduce QE to 60/50bn..only to then see the market drop 20%..and then spool up the printer to new highs >$100bn a month. After all, why wouldn't the fed also want to start buying US student debt?

The months ahead..sure won't be boring!

Goodnight from London