**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
It is amazing what a mere 10-15 billion Dollars can do. The Fed has been buying $85 billion worth of bonds for months now. With mere thoughts of tapering appearing in April, interest sensitive stocks, bonds and emerging market equities fell sharply for several months. Now it turns out that taper-speculation was all in vain. Instead of reducing quantitative easing by 10-5 billion Dollar, the Fed decided to maintain the $85 billion pace. This extra 10-15 billion Dollar probably added trillions of Dollars to the value of global equities. Stocks around the world surged, commodities gained and the Dollar plunged as the markets scurried to price in this "new" reality. The India Sensex Index ($BSE) is up over 3% today, the German DAX Index ($DAX) surged over 1% and hit a new high, and the Nikkei 225 ($NIKK) is challenging its July high. While this new reality may last a few weeks or even months, somehow I don't think we have seen the end of taper talk or actual tapering. One thing is for sure. The old mantra, don't fight the Fed, is alive and well.
be construed as a recommendation to buy, sell or sell-short said securities**
It is amazing what a mere 10-15 billion Dollars can do. The Fed has been buying $85 billion worth of bonds for months now. With mere thoughts of tapering appearing in April, interest sensitive stocks, bonds and emerging market equities fell sharply for several months. Now it turns out that taper-speculation was all in vain. Instead of reducing quantitative easing by 10-5 billion Dollar, the Fed decided to maintain the $85 billion pace. This extra 10-15 billion Dollar probably added trillions of Dollars to the value of global equities. Stocks around the world surged, commodities gained and the Dollar plunged as the markets scurried to price in this "new" reality. The India Sensex Index ($BSE) is up over 3% today, the German DAX Index ($DAX) surged over 1% and hit a new high, and the Nikkei 225 ($NIKK) is challenging its July high. While this new reality may last a few weeks or even months, somehow I don't think we have seen the end of taper talk or actual tapering. One thing is for sure. The old mantra, don't fight the Fed, is alive and well.
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Key Reports and Events (all times Eastern):
Thu - Sep 19 - 08:30 – Initial Jobless Claims
Thu - Sep 19 - 08:30 - Current Account Balance
Thu - Sep 19 - 10:00 - Existing Home Sales
Thu - Sep 19 - 10:00 - Philadelphia Fed
Thu - Sep 19 - 10:00 - Leading Indicators
Thu - Sep 19 - 10:30 - Natural Gas Inventories
Fri – Sep 06 – 08:30 – Employment Report
Sun – Sep 22 – 10:00 – German Elections
Tue – Oct 15 - 09:00 – Debt Ceiling Deadline
Charts of Interest: Tuesday and Thursday
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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