Charts I’m Watching: Jun 18, 2014

Fed announcements and press conference today, so the market should bounce higher afterward regardless of the results.  Remember, it’s the illusion that’s important — that whatever they announce is great news.  Doubters, check the market’s reaction on Dec 18 to Yellen’s confirmation that the Fed would, indeed, taper.

Speaking of illusions, the BOJ pulled a doozy last night.  Stocks soared and the yen fell after more dismal economic news.

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Many have noted the IH&S on the USDJPY — which certainly could play out.  Worth watching…

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US stocks are. so far, ignoring the fact that mortgage applications fell 9.2% last week — supposedly due to a 2 bps increase in rates.  SPX has TL resistance at 1944-45, in the vicinity of the purple .618 at 1944.18.

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UPDATE: 11:50 AM

This bounce in stocks is brought to you by the friendly neighborhood folks of USDJPY — which is backtesting its broken channel as ES/SPX are backtesting their SMA10s. But, don’t be surprised if the moving averages offer little resistance.  The deck is stacked, and there are very few investors willing to step in front of a well-planned ramp job.

In the news last night, the BOJ is now the single biggest holder of Japanese government bonds.


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What some folks forget is that the BOJ also purchases about a trillion yen of stocks every year, too — in addition to about 4.2 trillion already on the books.  There has been some talk in the past of selling the position, but every time a deadline approaches…they just can’t seem to pull the trigger.

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If you were the biggest investor in the bond market and the biggest investor in the stock market and had an unlimited amount of money with which to “intervene” in the unregulated foreign exchange market…would you allow any declines in value?  Neither would they.  The 1% rule is alive and well.   And, via the yen carry trade, it’s helping inflate other bubbles from New York to Mumbai.

Happy trading.










Charts I’m Watching: Jun 18, 2014 — 1 Comment

  1. Yes, we now have a double top on that SPX Daily Bearish Deep Crab, and yes I have to agree with you on the fudge economy, such a shame they invested $1.2 trillion in Iraq for, well nothing really…