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10 Year Yield Weekly Chart

TNX--X

The 10-Year yield index has been moving steadily higher for months now.  The trend has been well contained inside  a bullish channel that stretches from the April lows to this month’s peak.  This week the index has violated the lower band of this powerful channel.  This is an early sign that rates may have reached a peak for the year and are about to begin a much needed pullback.

‘The Fed is Pressing a Losing Bet’, says Doug Kass

http://blogs.wsj.com/moneybeat/2013/09/19/doug-kass-fed-is-pressing-a-losing-bet/

Peter Boockvar has a strong opinion on today’s FOMC decision.

The grand monetary experiment now going on 5 years continues full speed ahead. After teasing the market in May of the possibility of a taper, the FOMC has completely backed off. They said “the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” In the paragraph on the economy, they pretty much repeated the risks they mentioned in July that while “the housing sector has been strengthening…mortgage rates have risen further and fiscal policy is restraining economic growth.” Esther George again dissented “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long term inflation expectations.”

Bottom line, while the economic data over the past few months did not call for a taper according to the Fed’s econometric models, I believe they are making a massive mistake as this QE policy does nothing but manipulate and distort asset prices with no lasting positive impact on the economy. Rip this band aid off already I say. I will repeat again to the Fed, there will NEVER be the right time to cut back and today was the perfect opportunity to do so because the market was ready for it. Playing games now over this with the market will not smooth the eventual ease. Either way, the US bond market has already started the tightening process and that is what participants should be focused on. For stocks, I’ll say again, Party on Wayne, Party on Garth! And, I’ll declare this gold bear market over.

A Key Passage form the FOMC Announcment

“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.”

Midday musings from Sir Arthur Cashin:

Markets thrash about in low volume awaiting one/two punch from FOMC. As noted in Comments, expect whiplash oscillations on traders extrapolating from statement – could last 5 to 15 minutes, depending on amplitude.

Then a possible rollover on press conference.

Is taper reversible or is QE dead and we’re off to “forward guidance”?

Is taper monthly, quarterly or data driven decision?

Tons more questions. Responses and tone will count.

Run rate projection probably meaningless, assuming volume spike post 2:00.

At 12:45, the formula projected 530/610 off morning’s sleepy volume.

Boeing’s powerful breakout continues.

Last week's powerful breakout in Boeing continues.

Boeing is now up over 10% from last week’s open.  The stock closed Friday at new all time highs and is moving further into new high ground this week.   A re-test of key support near the July high($190.50)would provide a low risk entry opportunity.

 

Bristol-Myers Squibb surges following an upgrade from JP Morgan.

BMY is surging over 3% this morning after analysts at JP Morgan upgraded the pharmaceutical stock to ‘Overweight’ from ‘Neutral’.   JP Morgan has also lifted the price target to $52.00.  BMY has left a powerful breakout gap behind on the news.  Support here, just below $44.00, is very strong.  The stock is set up well for new bull leg and will soon be retesting its 52 week highs near $50.00.bmy week tc

Is there a Head & Shoulders top forming in the Dow Jones Industrials?

Is a Head & Shoulders top forming in the Dow Jones Industrials?

Eyeing the potential for an important double bottom in long term bonds.

Its very early in the process but a double bottom in the TLT may be forming.   The TLT is holding the $102.00 level as we near the mid point of September.  The August low rests here as well.  On the weekly chart the TLT has exceeded the oversold reading reached during the 2009 sell off.  Also of note, the collapse from this year's peak now equals the range of the powerful rally off the 2012 lows. (22 points)

Its very early in the process but a double bottom in the TLT may be forming. The TLT is holding the $102.00 level as we near the mid point of September. The August low rests here as well. On the weekly chart the TLT has exceeded the oversold reading reached during the 2009 sell off. Also of note, the collapse from this year’s peak now equals the range of the powerful rally off the 2012 lows. (22 points)

Bullish action in the Materials Sector ETF this week.

This Index is primarily composed of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products. Among its largest components are Monsanto, E.I. DuPont de Nemours & Co., and Dow Chemical Co.

xlb tc

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