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Still Lower Prices Ahead?

  • Written by Syndicated Publisher No Comments Comments
    June 23, 2013

    So far so good on our sell signal of ten days ago, which started with our short-term indicators.

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    Our intermediate-term indicators turned mixed and therefore neutral on May 22, ending the buy signal of December 11. So far May 22 was the exact top.

    The indicators then deteriorated further to a sell signal June 12, led by the sell signal on the short-term indicators.

    And the consensus of the 35 intermediate-term indicators we use remains on the sell signal.

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    Our next job will be to determine the downside targets, and the next buy signal.

    There is certainly no shortage of opinions based on surrounding conditions rather than technical analysis.

    Other Voices.

    Business Insiders, quoting David Zervos: Wednesday’s Bernanke pronouncements appeared to be a conscious effort to inject uncertainty into a fixed income market that feeds on certainty. . . . . . . . And while that may feel a little painful right now, we may end up being very thankful that the Committee took the actions it did Wednesday in the name of preserving future financial stability. . . . The Fed seems to have learned this lesson and it has decided to purge some of the QE demons from the fixed income markets early, before its too late and we have a souped-up version of 1994 on our hands. The beauty is that the Fed is still there to ease further if needed. If economic prospects sour, they will buy more bonds and stay lower for longer. Ben said as much Wednesday. So the “Bernanke Put” is very much alive and well.”

    Peter Schiff, Euro Pacific Capital: It’s fascinating how the goal posts have moved quickly on the Fed’s playing field. Months ago the conversation focused on the “exit strategy” it would use to unwind the trillions in bonds and mortgages that it had accumulated over the last few years. Despite apparent improvements in the economy, those discussions have given way to the more modest expectations for the “tapering” of QE. I believe that we should really be expecting a “tapering” of the tapering conversations. 

    As a result, I expect that the Fed will continue to pantomime that an eventual Exit Strategy is preparing for a grand entrance, even as their timeline and decision criteria become ever more ambiguous. In truth, I believe that the Fed’s next big announcement will be to increase, not diminish QE. After all, Bernanke made clear in his press conference that if the economy does not perform up to his expectations, he will simply do more of what has already failed.” 

    Angela Moon & Caroline Valetkevitch, Reuters: “With the Fed putting the market on notice that it will be weaned from easy money, possibly beginning before long, investors are going to look at the broad picture, which has plenty of warning signs. Economic growth remains spotty, Chinese credit markets are showing stress and interest rates are on the rise.

    One reason for equity investors to worry is the second-quarter earnings outlook. Earnings warnings from companies for the second quarter outnumber positive outlooks by 6.5 to 1, the most negative ratio since the first quarter of 2001, according to Thomson Reuters data.”

    To read my weekend newspaper column click hereMore Similarities To The Market Peak In 1973 

    Subscribers to Street Smart Report: See the charts and recommendations in the subscribers’  ‘Premium Content’ area of this blog.

    Images: Flickr (licence attribution)

    About The Author

     

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

     

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