- Fed signaled intent for QE2 on 21Sep10 (D1), actual trigger pulled on 03Nov10 (D2). End of QE2 indicated Jun11. Look at the 4 charts for period D1 to now (D3).
- USDX : Down D1-D2. Profit taking rally after D2, and then big down since.
- S&P500 : Unequivocally bullish D1-D3. Still looks up.
- US10YY : Sharp uptick (despite QE2 buying of UST by Fed) in yields D1-Feb11, anticipating higher growth and inflation from QE2. Since Feb11, large right shoulder topping out action likely due to failure of strong growth materializing. Now headed much lower.
- Copper : As per US10YY, bullish D1-Feb11 and then formed SHS top. But since then, has reclaimed NL = false break. Going back up only grudgingly, perhaps due to challenging growth prospects. Much overhead resistance to be overcome before chart can fly.
- So, from D3 on to near future, the charts look like : USDX down, S&P500 up, US10YY lower, Copper battling higher.
- Take above chart outlook and reverse engineer market logic. Conclusion = growth prospects to remain or turn even more challenging and calming inflation fears (= lower US10YY), likely outright or stealth QE3 (= liquidity driven equity rally), weak growth and lack of Fed tightening to crush USD some more. Copper caught between more liquidity and weak growth, with liquidity winning most of the time.
No comments:
Post a Comment