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Monday, January 4, 2016

A few weekly charts to start the year with an interesting perspective


Charts! Some with lines drawn on them!

SPY:


Whatever else I say about the health of the US economy, I gotta admit that is one big long ominous topping pattern right there.

I would say the August "omgfucksell" collapse is a negative for this chart, since it hasn't been recovered from, which means the market still awaits another one. And what it awaits it usually a-gets.

If I had faith in the intelligence of Wall Street, I would say this toppy chart is a searing indictment of the Fed's decision to raise rates with US output still far below trend and no wage inflation to be seen. Anyone with some Hicks and AD/AS behind them knows that you don't raise rates til Y is above Y-bar, and we're nowhere near that point, and we know because inflation is still way below 2%, and even the Fed knows there's utterly zero wage-push inflation going on anymore now that the working class has been beaten back down into the gutter, and didn't you all want zero interest rates anyway?

But I don't have faith in the intelligence of Wall Street. So either they're all selling US equities to buy Europe (boneheaded), or they're deleveraging (good for future equity market strength), or they're reallocating to money-market en masse (...actually that's about the most convincing explanation to me, but I haven't seen any data).

But if you don't know what the crackheads are doing, perhaps it's best to sit back and watch.

FXI:


Pretty freaky how the rebound from the August puke ended right at the 20-day Bollinger mean, eh? It's as if the entire market is using that mean line as a sell point.

USD ETF:


I'm waiting for the chattering class to realize that the USD hasn't actually done anything in the past year. OK sure, is that a cup and handle forming, which would mean a further jump of 20-30% in the USD is in the cards?

No. It's not a cup and handle forming because there's no reason for the USD to go on another 20% tear like it did in late 2014.


And all thru this fall, gold ex-USD still didn't break down below its support line. So gold only looks bad to Americans. Watch the gold-dollar correlation for warning of a possible gold upmove.


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