Thursday, September 30, 2010

Bull turnback - EOD

short update EOD

I know these days are full with doubts. My first post today was about bull turn back and let me show something:

You know I prefer RUA. RUA and SPX highly correlate but former trades almost twice bigger volumes, therefore result better and more clear volume indicators:

RUA 1-day:















Almost all indicators turned back from decline to rise.
We need to wait for price manifestation. I have time and patience.
I loaded lots of calls today and will sleep well tonight.

Good night!

Can't resist

As market mostly follows scenario I measured, and financials lead market again, I am buying 1 unit of SPX.
Also, buying 1 unit of HUI today.

Good luck!

RIFIN breakout

Market had a nice up. Daily characteristics will be different than I thought (starting much higher).
We need to wait for the 1st hour to make decision, but I am on the edge of buying 1 SPX unit.
Why?
RIFIN broke out of this wedge:

Turnback of bull

We could see boring days in prices, but, if you take a look into volumes, I really enjoy how big fight is there.
Let me show you a day on 1-min. I usually follow a doay on 5-min or 15 min charts, but I need to show what happened yesterday. Actually bears made a huge attack bulls could push back.














For a volume-bug, like me yesterday was really interesting. On 1-min chart McClellan gives us better hep than volume based sentiment.
Initially yesterday's results were eliminated making some money for smarts. Then you can see a bull-re test, with very effective price change, meaning bear exhaustion for smarts. So they produced a failed bull, made the usual pass over positions to dummies, and we can see they started to go to the bull side with no price effect. They could play this from 10:40 to 11:10 then price manifestation could not be held, a nice buy rally started.
We can exactly pinpoint bull exhaustion at 12:50, also we can see rising selling pressure. Now smarts start a fake bull rally just to pass their positions to dummies once again. We can see prices are not rising, while buy volume surge can be observed. Finally SBV oscillator shows elimination for 15:00. Please observe that SBV histo gave us bear signals 8 minutes before the heavy price manifestation (14:52)!
Then a massive short rally comes, this is a typical sign of smart-dumps. Dummies cant' load cheap shorts now, and all bear cycle exhausts in few minutes. Then we can see a low-efficiency short squeeze, McClellan gives signal of exhaustion, also, mvo clearly declares the end of the short game and suggests upcoming bull (MVO double red-green switch, first with extreme strong signals (15.05-15:30), then a weaker signal. That's the point smarts loaded some more calls. And all the game will continue today, same game every day, all the year....

Status: I'll be very quick:

RUA- 60min:
















We have an exhausted short-term bull cycle. I count with a rise and small drop beginning  of the day 30-sep, testing SPX 1135s then a steady bear exhaustion, few-hours around that finally goes into a rally to 1145s then drag to 1135s again. If this characteristics is in play, last bear rally will be used to load more calls for 1st of october and new quarter. Market does not like too much sideways move.

RUA- 1 day:
















As you can see bull setup has some damage, but on large, cumulative level bear volume remains on zero level.
SBV histo is rising from -7 to -5, momentum rose from 1.01 to 1.02. Market is reparing for a rise.
If financials start to give false bull price signals and I see internals are improving, I'll buy one more SPX unit.

I read some comments here the only buyer is FED. No way.I am sorry but it's not true. Smarts know when FED is stronger than any of them, Ben proved his power end of august and smashed billions of dollars of other's smarts did not agree with this bull. Smarts simply see less risk to go with Ben than attacking him now. He protects market at any price. He told it several times, and I feel this rally will be used as a start engine of boosting world economy. They will attack AYH and later ATH. Copper already completed AYH. Look, if Ben fails now, then US is in a big trouble, hopeless nation, failed trillions invested for recovery, smashed banks and debased USD. This is definitely not a preferred scenario. So, they smash dollar but will have returning economy and later they'll fix USD. We will see.

GOLD: Extremely stong internals.

Gold made it's 1300s correction overnight, now it has no technical resistance. The only resistance is human greed and insane behavior. We need to use psychology to determine gold exit points rather TA.
When others cheer, smile and rush for gold, media is full about gold, that will be our time to decrease our gold portfolio. Gold story will have a rude finish loosing 5-15% of value of it, as simply, there will no be buyer on other side. I'll not make an attempt not to loose that. For that time we will have 1 unit of hui and we will keep that, as gold will recover soon after and rise again. Patience is our friend.
I am just waiting for a hui ATH then will buy 1 more unit.

Good luck!

Wednesday, September 29, 2010

Patience

please.

There is a huge fight under surface. This is a normal mid-cycle exhaustion. This mid-cycle low lasts 5-7 trading days, today is the 3rd.
I estimate tomorrow this fight will start to manifest and friday will be a nice bull day. We need more volume to give better estimation.
Bull rally internals remained intact.
Loading little more calls.

Internals are still strong

It's a technical re-test, now bear side is exhausting.
Uptade comes later or tomorrow.

Tuesday, September 28, 2010

Liquidity trap

Liquidity trap

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The liquidity trap in Keynesian economics is a situation where monetary policy is unable to stimulate an economy, either through lowering interest rates or increasing the money supply.

Contents

[hide]

[edit] Conceptual evolution

In its original conception, a liquidity trap resulted when demand for money becomes infinitely elastic (i.e. where the demand curve for money is horizontal) so that further injections of money into the economy will not serve to further lower interest rates. Under the narrow version of Keynesian theory in which this arises, it is specified that monetary policy affects the economy only through its effect on interest rates. Thus, if an economy enters a liquidity trap, further increases in the money stock will fail to further lower interest rates and, therefore, fail to stimulate.
In the wake of the "Keynesian revolution" in the 1930s and 1940s, various neoclassical economists sought to minimize the concept of a liquidity trap by specifying conditions in which expansive monetary policy would affect the economy even if interest rates failed to decline. Don Patinkin and Lloyd Metzler specified the existence of a "Pigou effect," named after English economist Arthur Cecil Pigou, in which the stock of real money balances is an element of the aggregate demand function for goods, so that the money stock would directly affect the "IS" curve in an ISLM analysis, and monetary policy would thus be able to stimulate the economy even under the existence of a liquidity trap. While many economists had serious doubts about the existence or significance of this Pigou Effect, by the 1960s academic economists gave little credence to the concept of a liquidity trap.
The neoclassical economists asserted that, even in a liquidity trap, expansive monetary policy could still stimulate the economy via the direct effects of increased money stocks on aggregate demand. This was essentially the hope of the Bank of Japan in the 1990s, when it embarked upon quantitative easing. Similarly it was the hope of the central banks of the United States and Europe in 2008–2009, with their foray into quantitative easing. These policy initiatives tried to stimulate the economy through methods other than the reduction of short-term interest rates.
However, the concept returned to prominence in the 1990s when the Japanese economy fell into a period of prolonged stagnation despite the presence of near-zero interest rates.[1] While the liquidity trap as formulated by Keynes refers to the existence of a horizontal demand curve for money at some positive level of interest rates, the liquidity trap invoked in the 1990s referred merely to the presence of zero interest rates (ZIRP), the assertion being that since interest rates could not fall below zero, monetary policy would prove impotent in those conditions, just as it was asserted to be in a proper exposition of a liquidity trap.
While this later conception differed from that asserted by Keynes, both views have in common first the assertion that monetary policy affects the economy only via interest rates, and second the conclusion that monetary policy cannot stimulate an economy in a liquidity trap.
Much the same furor has emerged in the United States and Europe in 2008–2010, as short-term policy rates for the various central banks have moved close to zero.[2]

[edit] See also

[edit] References

  1. ^ Sophia N. Antonopoulou, "The Global Financial Crisis," The International Journal of Inclusive Democracy, Vol. 5, No. 4 / Vol. 6, No. 1 (Autumn 2009 / Winter 2010).
  2. ^ Paul Krugman, "How Much Of The World Is In a Liquidity Trap?," http://krugman.blogs.nytimes.com/ (17 March 2010).

Ben's speech

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

Deflation: Making Sure "It" Doesn't Happen Here

Since World War II, inflation--the apparently inexorable rise in the prices of goods and services--has been the bane of central bankers. Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an "inflation bias" in the policies of central banks, and still others. Despite widespread "inflation pessimism," however, during the 1980s and 1990s most industrial-country central banks were able to cage, if not entirely tame, the inflation dragon. Although a number of factors converged to make this happy outcome possible, an essential element was the heightened understanding by central bankers and, equally as important, by political leaders and the public at large of the very high costs of allowing the economy to stray too far from price stability.
With inflation rates now quite low in the United States, however, some have expressed concern that we may soon face a new problem--the danger of deflation, or falling prices. That this concern is not purely hypothetical is brought home to us whenever we read newspaper reports about Japan, where what seems to be a relatively moderate deflation--a decline in consumer prices of about 1 percent per year--has been associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems in the banking and corporate sectors. While it is difficult to sort out cause from effect, the consensus view is that deflation has been an important negative factor in the Japanese slump.
So, is deflation a threat to the economic health of the United States? Not to leave you in suspense, I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small, for two principal reasons. The first is the resilience and structural stability of the U.S. economy itself. Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency. A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape. Also helpful is that inflation has recently been not only low but quite stable, with one result being that inflation expectations seem well anchored. For example, according to the University of Michigan survey that underlies the index of consumer sentiment, the median expected rate of inflation during the next five to ten years among those interviewed was 2.9 percent in October 2002, as compared with 2.7 percent a year earlier and 3.0 percent two years earlier--a stable record indeed.
The second bulwark against deflation in the United States, and the one that will be the focus of my remarks today, is the Federal Reserve System itself. The Congress has given the Fed the responsibility of preserving price stability (among other objectives), which most definitely implies avoiding deflation as well as inflation. I am confident that the Fed would take whatever means necessary to prevent significant deflation in the United States and, moreover, that the U.S. central bank, in cooperation with other parts of the government as needed, has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief.
Of course, we must take care lest confidence become over-confidence. Deflationary episodes are rare, and generalization about them is difficult. Indeed, a recent Federal Reserve study of the Japanese experience concluded that the deflation there was almost entirely unexpected, by both foreign and Japanese observers alike (Ahearne et al., 2002). So, having said that deflation in the United States is highly unlikely, I would be imprudent to rule out the possibility altogether. Accordingly, I want to turn to a further exploration of the causes of deflation, its economic effects, and the policy instruments that can be deployed against it. Before going further I should say that my comments today reflect my own views only and are not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee.
Deflation: Its Causes and Effects
Deflation is defined as a general decline in prices, with emphasis on the word "general." At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling. Price declines in a specific sector may occur because productivity is rising and costs are falling more quickly in that sector than elsewhere or because the demand for the output of that sector is weak relative to the demand for other goods and services. Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation. Deflation per se occurs only when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines.
The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress.
However, a deflationary recession may differ in one respect from "normal" recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero.2 Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the "zero bound."
Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be.3 To take what might seem like an extreme example (though in fact it occurred in the United States in the early 1930s), suppose that deflation is proceeding at a clip of 10 percent per year. Then someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn.
Although deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation. This burden arises because, even if debtors are able to refinance their existing obligations at low nominal interest rates, with prices falling they must still repay the principal in dollars of increasing (perhaps rapidly increasing) real value. When William Jennings Bryan made his famous "cross of gold" speech in his 1896 presidential campaign, he was speaking on behalf of heavily mortgaged farmers whose debt burdens were growing ever larger in real terms, the result of a sustained deflation that followed America's post-Civil-War return to the gold standard.4 The financial distress of debtors can, in turn, increase the fragility of the nation's financial system--for example, by leading to a rapid increase in the share of bank loans that are delinquent or in default. Japan in recent years has certainly faced the problem of "debt-deflation"--the deflation-induced, ever-increasing real value of debts. Closer to home, massive financial problems, including defaults, bankruptcies, and bank failures, were endemic in America's worst encounter with deflation, in the years 1930-33--a period in which (as I mentioned) the U.S. price level fell about 10 percent per year.
Beyond its adverse effects in financial markets and on borrowers, the zero bound on the nominal interest rate raises another concern--the limitation that it places on conventional monetary policy. Under normal conditions, the Fed and most other central banks implement policy by setting a target for a short-term interest rate--the overnight federal funds rate in the United States--and enforcing that target by buying and selling securities in open capital markets. When the short-term interest rate hits zero, the central bank can no longer ease policy by lowering its usual interest-rate target.5
Because central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has "run out of ammunition"--that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. The central bank's inability to use its traditional methods may complicate the policymaking process and introduce uncertainty in the size and timing of the economy's response to policy actions. Hence I agree that the situation is one to be avoided if possible.
However, a principal message of my talk today is that a central bank whose accustomed policy rate has been forced down to zero has most definitely not run out of ammunition. As I will discuss, a central bank, either alone or in cooperation with other parts of the government, retains considerable power to expand aggregate demand and economic activity even when its accustomed policy rate is at zero. In the remainder of my talk, I will first discuss measures for preventing deflation--the preferable option if feasible. I will then turn to policy measures that the Fed and other government authorities can take if prevention efforts fail and deflation appears to be gaining a foothold in the economy.
Preventing Deflation
As I have already emphasized, deflation is generally the result of low and falling aggregate demand. The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place. Beyond this commonsense injunction, however, there are several measures that the Fed (or any central bank) can take to reduce the risk of falling into deflation.
First, the Fed should try to preserve a buffer zone for the inflation rate, that is, during normal times it should not try to push inflation down all the way to zero.6 Most central banks seem to understand the need for a buffer zone. For example, central banks with explicit inflation targets almost invariably set their target for inflation above zero, generally between 1 and 3 percent per year. Maintaining an inflation buffer zone reduces the risk that a large, unanticipated drop in aggregate demand will drive the economy far enough into deflationary territory to lower the nominal interest rate to zero. Of course, this benefit of having a buffer zone for inflation must be weighed against the costs associated with allowing a higher inflation rate in normal times.
Second, the Fed should take most seriously--as of course it does--its responsibility to ensure financial stability in the economy. Irving Fisher (1933) was perhaps the first economist to emphasize the potential connections between violent financial crises, which lead to "fire sales" of assets and falling asset prices, with general declines in aggregate demand and the price level. A healthy, well capitalized banking system and smoothly functioning capital markets are an important line of defense against deflationary shocks. The Fed should and does use its regulatory and supervisory powers to ensure that the financial system will remain resilient if financial conditions change rapidly. And at times of extreme threat to financial stability, the Federal Reserve stands ready to use the discount window and other tools to protect the financial system, as it did during the 1987 stock market crash and the September 11, 2001, terrorist attacks.
Third, as suggested by a number of studies, when inflation is already low and the fundamentals of the economy suddenly deteriorate, the central bank should act more preemptively and more aggressively than usual in cutting rates (Orphanides and Wieland, 2000; Reifschneider and Williams, 2000; Ahearne et al., 2002). By moving decisively and early, the Fed may be able to prevent the economy from slipping into deflation, with the special problems that entails.
As I have indicated, I believe that the combination of strong economic fundamentals and policymakers that are attentive to downside as well as upside risks to inflation make significant deflation in the United States in the foreseeable future quite unlikely. But suppose that, despite all precautions, deflation were to take hold in the U.S. economy and, moreover, that the Fed's policy instrument--the federal funds rate--were to fall to zero. What then? In the remainder of my talk I will discuss some possible options for stopping a deflation once it has gotten under way. I should emphasize that my comments on this topic are necessarily speculative, as the modern Federal Reserve has never faced this situation nor has it pre-committed itself formally to any specific course of action should deflation arise. Furthermore, the specific responses the Fed would undertake would presumably depend on a number of factors, including its assessment of the whole range of risks to the economy and any complementary policies being undertaken by other parts of the U.S. government.7
Curing Deflation
Let me start with some general observations about monetary policy at the zero bound, sweeping under the rug for the moment some technical and operational issues.
As I have mentioned, some observers have concluded that when the central bank's policy rate falls to zero--its practical minimum--monetary policy loses its ability to further stimulate aggregate demand and the economy. At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
The conclusion that deflation is always reversible under a fiat money system follows from basic economic reasoning. A little parable may prove useful: Today an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Of course, the U.S. government is not going to print money and distribute it willy-nilly (although as we will see later, there are practical policies that approximate this behavior).8 Normally, money is injected into the economy through asset purchases by the Federal Reserve. To stimulate aggregate spending when short-term interest rates have reached zero, the Fed must expand the scale of its asset purchases or, possibly, expand the menu of assets that it buys. Alternatively, the Fed could find other ways of injecting money into the system--for example, by making low-interest-rate loans to banks or cooperating with the fiscal authorities. Each method of adding money to the economy has advantages and drawbacks, both technical and economic. One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies. Thus, as I have stressed already, prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.
So what then might the Fed do if its target interest rate, the overnight federal funds rate, fell to zero? One relatively straightforward extension of current procedures would be to try to stimulate spending by lowering rates further out along the Treasury term structure--that is, rates on government bonds of longer maturities.9 There are at least two ways of bringing down longer-term rates, which are complementary and could be employed separately or in combination. One approach, similar to an action taken in the past couple of years by the Bank of Japan, would be for the Fed to commit to holding the overnight rate at zero for some specified period. Because long-term interest rates represent averages of current and expected future short-term rates, plus a term premium, a commitment to keep short-term rates at zero for some time--if it were credible--would induce a decline in longer-term rates. A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities up to two years from maturity at prices consistent with the targeted yields. If this program were successful, not only would yields on medium-term Treasury securities fall, but (because of links operating through expectations of future interest rates) yields on longer-term public and private debt (such as mortgages) would likely fall as well.
Lower rates over the maturity spectrum of public and private securities should strengthen aggregate demand in the usual ways and thus help to end deflation. Of course, if operating in relatively short-dated Treasury debt proved insufficient, the Fed could also attempt to cap yields of Treasury securities at still longer maturities, say three to six years. Yet another option would be for the Fed to use its existing authority to operate in the markets for agency debt (for example, mortgage-backed securities issued by Ginnie Mae, the Government National Mortgage Association).
Historical experience tends to support the proposition that a sufficiently determined Fed can peg or cap Treasury bond prices and yields at other than the shortest maturities. The most striking episode of bond-price pegging occurred during the years before the Federal Reserve-Treasury Accord of 1951.10 Prior to that agreement, which freed the Fed from its responsibility to fix yields on government debt, the Fed maintained a ceiling of 2-1/2 percent on long-term Treasury bonds for nearly a decade. Moreover, it simultaneously established a ceiling on the twelve-month Treasury certificate of between 7/8 percent to 1-1/4 percent and, during the first half of that period, a rate of 3/8 percent on the 90-day Treasury bill. The Fed was able to achieve these low interest rates despite a level of outstanding government debt (relative to GDP) significantly greater than we have today, as well as inflation rates substantially more variable. At times, in order to enforce these low rates, the Fed had actually to purchase the bulk of outstanding 90-day bills. Interestingly, though, the Fed enforced the 2-1/2 percent ceiling on long-term bond yields for nearly a decade without ever holding a substantial share of long-maturity bonds outstanding.11 For example, the Fed held 7.0 percent of outstanding Treasury securities in 1945 and 9.2 percent in 1951 (the year of the Accord), almost entirely in the form of 90-day bills. For comparison, in 2001 the Fed held 9.7 percent of the stock of outstanding Treasury debt.
To repeat, I suspect that operating on rates on longer-term Treasuries would provide sufficient leverage for the Fed to achieve its goals in most plausible scenarios. If lowering yields on longer-dated Treasury securities proved insufficient to restart spending, however, the Fed might next consider attempting to influence directly the yields on privately issued securities. Unlike some central banks, and barring changes to current law, the Fed is relatively restricted in its ability to buy private securities directly.12 However, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window.13 Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral.14 For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Pursued aggressively, such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector, over and above the beneficial effect already conferred by lower interest rates on government securities.15
The Fed can inject money into the economy in still other ways. For example, the Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.16
I need to tread carefully here. Because the economy is a complex and interconnected system, Fed purchases of the liabilities of foreign governments have the potential to affect a number of financial markets, including the market for foreign exchange. In the United States, the Department of the Treasury, not the Federal Reserve, is the lead agency for making international economic policy, including policy toward the dollar; and the Secretary of the Treasury has expressed the view that the determination of the value of the U.S. dollar should be left to free market forces. Moreover, since the United States is a large, relatively closed economy, manipulating the exchange value of the dollar would not be a particularly desirable way to fight domestic deflation, particularly given the range of other options available. Thus, I want to be absolutely clear that I am today neither forecasting nor recommending any attempt by U.S. policymakers to target the international value of the dollar.
Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation.
Fiscal Policy
Each of the policy options I have discussed so far involves the Fed's acting on its own. In practice, the effectiveness of anti-deflation policy could be significantly enhanced by cooperation between the monetary and fiscal authorities. A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.18
Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
Japan
The claim that deflation can be ended by sufficiently strong action has no doubt led you to wonder, if that is the case, why has Japan not ended its deflation? The Japanese situation is a complex one that I cannot fully discuss today. I will just make two brief, general points.
First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt. Plausibly, private-sector financial problems have muted the effects of the monetary policies that have been tried in Japan, even as the heavy overhang of government debt has made Japanese policymakers more reluctant to use aggressive fiscal policies (for evidence see, for example, Posen, 1998). Fortunately, the U.S. economy does not share these problems, at least not to anything like the same degree, suggesting that anti-deflationary monetary and fiscal policies would be more potent here than they have been in Japan.
Second, and more important, I believe that, when all is said and done, the failure to end deflation in Japan does not necessarily reflect any technical infeasibility of achieving that goal. Rather, it is a byproduct of a longstanding political debate about how best to address Japan's overall economic problems. As the Japanese certainly realize, both restoring banks and corporations to solvency and implementing significant structural change are necessary for Japan's long-run economic health. But in the short run, comprehensive economic reform will likely impose large costs on many, for example, in the form of unemployment or bankruptcy. As a natural result, politicians, economists, businesspeople, and the general public in Japan have sharply disagreed about competing proposals for reform. In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve.
In short, Japan's deflation problem is real and serious; but, in my view, political constraints, rather than a lack of policy instruments, explain why its deflation has persisted for as long as it has. Thus, I do not view the Japanese experience as evidence against the general conclusion that U.S. policymakers have the tools they need to prevent, and, if necessary, to cure a deflationary recession in the United States.
Conclusion
Sustained deflation can be highly destructive to a modern economy and should be strongly resisted. Fortunately, for the foreseeable future, the chances of a serious deflation in the United States appear remote indeed, in large part because of our economy's underlying strengths but also because of the determination of the Federal Reserve and other U.S. policymakers to act preemptively against deflationary pressures. Moreover, as I have discussed today, a variety of policy responses are available should deflation appear to be taking hold. Because some of these alternative policy tools are relatively less familiar, they may raise practical problems of implementation and of calibration of their likely economic effects. For this reason, as I have emphasized, prevention of deflation is preferable to cure. Nevertheless, I hope to have persuaded you that the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound.19

Quick update

1-day RUA: negative histo, oscillator below critical level, buy volume is under critical signal level but sell volume is still zero, momentum is in bearish territory, sentiment is turning upward.
A very small hit can turn market to a trend-change you would say.

2-days RUA: positive histo, stable oscillator far above critical level, SB buying volume well above critical signal, sell volume steady zero, exhausting momentum, medium sentiment.

Market needs momentum and new bull injection. And will get it.
While smalls in panic and hesitate, big guys play again, they took profits and now they started to buy some.
I keep our 1 unit of SPX while I dont see improvement on SPS but I will sleep very well tonight!

Charts will come later or early tomorrow.

Cheers!

SPS - WOWWWW!!!

Did I say I love MV TA ?















What would you do if you'd see this chart?
Personally I loaded RIFIN calls. Again, tracking the game of smarts. Always the same, never ending rotten story. Keep prices steady, sell while others buy. Push prices down and start buy while others sell. Ehhh...

NOTE: I am not buying back our 1 unit of SPX in this blog.
This blog is about medium-term, low-risk trading. Sorry if I confuse you with my day-trading decisions. I will not do that too frequent.

Why did I sell 1 unit of SPX?

SPS (RIFIN) 60 min chart:















Love or hate, there is no improvement without financials. I am constantly monitoring SPS (similar to RIFIN), as it gives us help to determine whether a given rally is sustainable or not. SPS is in decline since 21-SEP-2010 14:30 and the most recent bull cycle on 60 min chart could only support 195, but there was no improvement. When AD sentiment falls under 50 it means high probability of bearish cycle. As you can see yesterday oscillator turned to negative, buy volume fell, sell volume rose, momentum turned negative and histo had a bearish cross. Correction of SPS is under way can drag market down and wipe our nice gain on the second unit.. I did not take that risk, rather I sold that unit and now I am waiting till SPS is well above current resistance and reaches 200. When SPX tests that level and RUA gives still confirmed bull, I'll buy back our 2nd unit of SPX.

Monday, September 27, 2010

POMO DAYS

if you are interested

http://www.tradingtheodds.com/2010/09/permanent-open-market-operations-pomo/


Conclusion:

Although with respect to those session where the FED’s Permanent Open Market Operation occurred no significant end-of-day edge will be provided, FED’s Permanent Open Market Operations accumulated ( e.g. at least 9 during the last 20 sessions) historically had remarkable and statistically significant positive implications with respect to the market’s short- (e.g. at least one higher close over the course of the then following 10 sessions) and intermediate term performance looking 1, 2 and 3 month ahead (trading higher 3 month later on all of those 144 potential occurrences/trades).
This could very well be a reason for the market’s above-average month-to-date performance despite a couple of (negative) seasonalites (e.g. the historical negative week immediately following September’s triple witching) and setups (e.g. the down-day immediately following the Labor Day exchange holiday).

WARNING SPS (RIFIN) upcoming correction

There is an issue with financials, they are weakening.
I thought today internals will improve.
Selling 1 unit of SPX, big guys take profits, it will manifest in prices.

R3k internals are fine, but momentum is not improving as strong as it should, so 1 unit of SPX is being kept.

Now we have almost 10% profit in 5 trades since end of June. Not so bad, he?

Week-End Summary

As I wrote a detailed mid-week post analyzing current situation, I'll make few notes and show our new liquidation limits and bull/bear scenarios.

R3k (RUA) :

2-days:















All indicators are strong, MVO signals a start of a local surge.

RUA 1-day:
















1-day RUA suggests critical histogram level, but momentum turning back. MVO suggests bull surge exhaustion, so we can count with a less dynamic market.

Both 1 and 2 days RUA charts show continuing bull market, but signal a final stage of bull will exhaust within 10-15 trading days.

R2k RUT:

Usually I dont sow any RUT charts, as SPX is more popular, but now it shows interesting volume signals:















As you can see 2-days MVO gave us a favor and generated MVO signal last 8 trading days.
If someone made a bet on this horse, now he can count with nice sum of profit. MVO is one of the most reliable indicators of MV indicators.


RUT 1-day:
















Second leg MVO surge is on its way.

SPX Ichimoku:

I changed our soft liquidation according to the last friday's breakout.
August highs taken, now next target is april highs. We will sell our 1 unit at unexpected fall (soft liquidation has been changed to 1120s) or NYMO MA cross or just before reaching april highs.

































































































GOLD:

As you can see, I have 3 units of gold and 2 units of SPX and I don't plant to buy 1 more unit of SPX, but plan to buy 1 more unit of gold miner.
Gold is in an absolutely confirmed bull cycle, almost unstoppable.
If it will make a pullback (I pray), I don't count more than 1-2%.

Internals are that strong, I can imagine that GOLD (and rather silver) won't make any correction. It just pushed through AYH without any major issue, now we progress toward ATH.
I'll buy our 4th unit above gold 1305 or HUI ATH+1%. If gold is on take off or runaway mode, then our major problem is to determine exit points of our units.

XAU is extremely strong as well, I count further, double gold rally with white metal.

Good luck!

Friday, September 24, 2010

Leaving to celebrate

one of my best trading days.
I loaded huge amount of SOX calls this week and twice more yesterday, now I took profit!
Of course, monday is a cool down day and we will see some sideways move next week.
Discuss is down, I can't answer you. I'll try to log in on sunday.

Thanks for your compliments, but I am repeating: it's not an ego-blog, my purpose is to demonstrate the  effectiveness of voume based TA.
Please be so kind and open an MV account, practice and pose your questions.

Cheers, good luck!

Mid-week status with charts

Dear my Readers,

Your number is large, and I promised to provide some charts. Promise is promise...

Before starting to discuss volume analysis, I need to rise your attention to a sad improvement in USD.
USD usually makes inverse move than market. Last 3 days market is down and USD lost it's value, also lost an important support. Currency crisis on the way. It'll take months to have clear manifestation, but this type of behavior of dollar is always a clear sign of a fundamental issue. Now FED has no way back; if market rises then USD falls, if makret falls, USD falls. There is no reason not to push pedal on QE and flood market with liquidity. I am sure FED has intelligent and highly educated people and they know what to do and also they know the consequence of it. T-bills and cash is not a safe haven now, they loose their value even they provide fix positive return. Actually it was the only way to decrease almost not-payable internal deficit: let masses and other countries buy t-bills, and then debase dollar. Now they finance US deficits. Nice solution in short-term, but others will not be happy with this, so US jeopardizes the global reserve status of USD.
























FED realized they are in a dead-end street, they just can take it easy and serve short-term interests: demonstrate nice results on market without any strong fundamentals.
Anyway we need to trade market here in this blog, with no emotions.
Gold, precious metals will start to be the only safe heaven.

So, let's see our beloved RUA or Russel 3000 volume figures:















RUA suggests intact bull internals on 1-day chart, histogram still gives positive numbers and oscillator is still above the critical level. Buy volume declines to critical level, but buy volume remains steady zero.
If sell volume rises from zero on 1-day chart we will seriously consider to liquidate.
So far other indicators are okay, as you can see this three days resulted low bull momentum, could not manage to turn market back to negative momentum territories.

RUA fakeout analysis is negative. We have that massive bull volume aggregation simply caused no damage on our oscillators. (lowest indicator is the longer-period oscillator)















RUA 2d chart:















There is no damage on 2-days chart at any indicator, actually volumes suggest rising bull volume! Smarts play with masses again.
A quick note: please observe volume bars on 2-day chart, this is the first red one in the last 8 bars. 2 consecutive red bars suggest high probability of overall trend-change.

SPX:

Market had this status at opening bell, 60-min chart:















On 60-min charts, this, current bear started to be prepared at 21-sep 15:30.
Smarts could manage low price-effect in surface for 1.5 days,making sure smarts could buy cheap puts.
Then, yesterday early hours price manifestation started, smarts sold their puts, loaded bull positions, and played this game twice. This game is usual and happened as I estimated, and we might see the same on friday with a nice buyup at the end.

Looking into the chart there is a low chance they jeopardize their bull positions with further play with other market players, and yesterday evening they loaded nice sum of calls again. I read some notes I am brave or bold. I am not brave, I just follow their track.

As I saw no breaking market internals I made a pretty safe buy at 1123.
Reason: EOD 60-min chart suggests bear volume exhaustion, it seems we have a double dip scenario with a single short period bear scenario. Maybe we will see a second leg, but EOD chart rather suggests exhaustion. Look, comparing this bearish volume to the 1-day or 2-days chart is very small.

60-min EOD chart (shows exhaustion)















Please observe  double-bottom histogram showing exhaustion, also sell-volume decreased and all this cycle remained below the critical signal level.
Usually sentiment is the first what suggest a turn, and now that started to go upside.
Also momentum is increasing toward bullish territories.

You can ask me: how do I know there will not be next leg down? My answer is simple: I dont know it.
There are only probabilities.
Longer-term probability of bull is that high, I simply take the risk. Our supports, danger zones and liquidation limits will still make sure we will win on this cycle even things turn to bearish.

As it's an educational blog, let's collect why did I buy 1 unit of SPX:
1. RUA (the market itself ) is still very strong
2. fakeout analysis is negative
3. selling volume is steady 0 on 1-day RUA and SPX chart
4. 60-min SPX chart shows high probability of exhaustion
5. USD debasement
6. Parabolic SAR should be kept intact

Market might test 100 EMA on 60-min chart or 200 ema on 1-day chart, so I count with further 10-15 points of fall and final buyup and further sideways move in the next 24-36 trading hours. Most possible bear and bull scenarios can be found on chart below.

 Finally I've updated my chart about supports and liquidation zones.
Priority:
1. Watch ichimoku cloud support. If fails liquidate 1 unit:
2. Check danger zone
3. If soft liquidation zone reached, liquidate 1 unit
4. Few points before hard liquidation start to consider load puts (subject of short selling is not in scope of this blog)














Gold: Media is full with chats about gold, so I expect masses jump in, and then smarts dump with some 1-2% in gold and gold miners at 1300 freaking out masses again and use lower prices to buy more.

Broken USD and upcoming heavy market easing will make sure we will see gold in 1500s soon and then higher.

Good luck!

PS: New readers are kindly asked to read the FAQ
As you know, I am a big SOX fun. Semiconductors are just before a nice gain again.

Thursday, September 23, 2010

1 unit of SPX bought

@1123

Here we go

Market choose a different scenario. As I wrote on Tuesday, I was expecting oscillator cross (bull exhaustion signal within 2-3 days).
So far internals are strong for bulls, but we need more volume to see figures.
EOD or tomorrow there will be 1 unit of SPX bought.
I keep our supports, etc same, our danger zone (soft liquidation) is under 1112.
( http://smartmoneyvolume.blogspot.com/2010/09/quick-update.html , ichimoku).
I'll come back EOD and provide some charts.

Good luck!

Wednesday, September 22, 2010

Bull consolidation

SPX: we still have strong bull internals. I expect Thursday is a little up and Friday down: that will be a great signal to buy 1 unit.

GOLD: runs as expected. Media is full with 'gold shines' articles meaning a shot-term correction under way. Masses just realize to the rally, will make a buy just now, so it's a great opportunity for smarts to take profit, pull prices down and buy cheap before the rally. I will keep all of our 3 units.

Good luck!

Tuesday, September 21, 2010

Quick update

SPX: Today's FED decision is a clear indication of an ongoing QE.
Things happen as predicted, internals are weakening.
R3K 1-day histogram gives weak signal, but oscillator is still above the critical level, also there is no rising sell volume signal, means we will see a new smart-trick again: bounce market with a 1-2% and then make a dip-buy to continue current trend.
Of course, masses will identify downward price movement as the end of this bull rally, will liquidate their positions and load puts to short the market. They will loose their position and give their gains to smarts and cover at higher level..
We will do the same as smarts, and, if our volume charts confirm bear-trap, we perform a 1 unit of dip-buy.
As per moment I see minimum 2-3 trading days before stocks start their decline. Close monitoring of 60-mins charts is strongly advised.















GOLD: USD is just on side of falling under a critical level, 80. This is a clear signal of artificial dollar weakening, a clear path for dollar devaluation will send gold to extremes. Please don't make a mistake: it's not same as inflation. It's a debasement risking dollar to loose it's reserve status.
The only thing is to sit tight and watch the show. Smarts are constantly pushing their volumes into PM sector, they just will make more space to buy cheaper. What we need, strong nerves in the upcoming days to see our miners loose 1.5-2% from their value. Smarts eager to inject more into PM sector. It will result a very quick upswing move in prices, starting their game with futures leave masses out again.
I will not sell any of our HUI unit till 3-day chart has a clear sell signal.















Silver: as silver is partially an industrial metal as well, coincidence of expected stock market correction and gold correction will result a sharp fall. One needs very good stomach to digest 3-5% loss on this sector, but upswing on gold and spx will make an even more sharp shoot up on silver prices. In order to eliminate risks 2 and 3-day XAU reading and close monitoring is needed.
















All of our soft liquidation etc remains same.
If I have time I'll put some charts as well. For this time I am sure you have an MV account and you see figures.

Ride this bull, dont give up, be smart!
Good luck!

Monday, September 20, 2010

Quick update

As I predicted today we had the price manifestation of the huge bull volume insertion from last friday and today that buy volume insertion continued. Market gained momentum again, it gave steam for further rise.
Therefore expected correction is delayed few days.

Just watching SOX. You know that's my favourite money-making index. It's before a nice gain again.

I'll make some charts etc tomorrow or wednesday.
We can put our soft liquidation to 1110 now.

Gold is shine and seems unstoppable. Correction is under way any time, I feel it will take ATH before correction.

Good luck!

Sunday, September 19, 2010

Week-End Summary

Dear my readers,

I need to run, I'll be shorter than usually in my week-end summary.

Last week:

After the big gain market broke the august bear-trend. Now we can talk an almost 4 month consolidation and sideways move.
Breaking 1130 was not easy and needs further and stronger confirmation. Last friday we could observe an enermous fight in the last trading hour. On RUA there was a trade of 2.5Bn in an hour. This index usually trades around 5Bn a day.
It was a huge battle. Almost all selling pressure was bought immediately on all major indexes. Some indexes failed to manage closing positive, the most important is SPS (similar to RIFIN) 

 

but only with half percent.
An invisible hand bought all selling pressure and did not let market to fail.


















This type of buy can be observed on 31-AUG-2010. That buy was huge as well but only about 80% of last friday's buying power. Wowww...

Current Status:

RUA (R3k) 2-days:

















2-Day RUA charts showsweakening momentum but improving bull volume oscillator. Selling volume remains flat zero while buyin volume remains steady. 6-day sentiment indicator is a little high.

RUA 2-Days Fakeout














As we can see result is negative. It's a longer-term bull cycle, not a short bull trap.

RUA 1 day:















Histogram shows weakening bull signal, signal level is still fine, does not show clear exhaustion. Rising fast signal suggest further bull volume insertion before a minor correction.

SPX:

2 days:














2-days chart momentum indicator fell under critical level, histogram is not generating signal, however oscillator and selling/buying volume shows no signal for a major correction. Market needs further bull insertion to continue it's growth, more, decisive bull volume is needed.

SPX 1-day


















1 day chart shows strong histogram signal, steady oscillator and bull volume signal, and eligible bull momentum. Sentiment is fine.

Gold miners:

3-day:














3-day HUI charts shows a beginning phase of a strong and steady bull rally with a sloght MVO bull signal.
With the recent, doubled volume insertion this market became extremely bullish. We will see daily up and downswings, our only task will be keep our bull bets.

2-day HUI














2 day HUI shows clear shorter-term exhaustion. Oscillator signal gave a clear bearish warning, histogram also gave short-term bearish signal. Histogram reading was -9 and now rose to -3 suggesting further bull insertion and rising prices.

Prognosis:

SPX:
Last friday's buy volume suggests an upcoming quick rally attacking 1130 again. Estimation is to take that critical point again and run to the 1135s. That quick rally will exhaust in the next 8-12 trading hours. A re-test of 1130s is expected to the recent GAP around 1110-1112 but bulls will perform dip-buy sending market to 1130 with a decisive, final volume insertion.
We will keep our 1 unit of SPX with soft liqudation @1080s.

GOLD miners:
Some further  correction is expected. This will be used for further smart bull insertion. We will keep our 3 units of HUI and sit tight. Further, hyperbolic bull rally is expected.
Silver miners are prepared for a wild correction, but gold will drag silver upward resulting historical gain on silver miner stocks.

Good luck!

Thursday, September 16, 2010

RIFIN battle today - how to read 60 mins volume charts?

Woww... what a nice day....

Generally our figures are pretty o.k., and facts vs forecast seems fine with a small difference.













In my forecast I thought there will be a bigger fight with more up and downswings.
I feel a fight will come soon, but not now. It will start from higher level.

Before I am leaving and have some beer  I'd like to show you the nice battle on RIFIN today.
RIFIN (here in MV SPX financials) is in a constant focus. Why? There is no market improvement without banks. Love or hate it, but this is how our economy works.
I am sure that you remember for my similar post. If not, then please find link below.

http://smartmoneyvolume.blogspot.com/2010/09/rifin-battle.html

So, let's see what happened today?

















What we need to do is to understand the basic characteristics of volume cycles.

As you can see, a normal cycle lasts from a sell/buy cross till the next cross. C5 is a typical textbook sample.
Unfortunately the drawing capability of MV is very limited, so I make my charts in a paint program has no straight vertical lines. All the lines between cycles should be vertical.

On 60-mins chart we can identify a cycle using the volume based sentiment indicator (second from bottom if you dont remember. About cycles etc. please read my corresponding post
http://smartmoneyvolume.blogspot.com/2010/09/about-fakeout-analysis.html
)

Please observe sentiment indicator. Normally a cycle is completed when it's value is 50 on 60-min chart.

We the following type of cycle characteristics:
-single mirror (symmetric)
-double mirror (symmetric)
-assimetric

These characteristics are valid for bull and bear as well.
Please observe the strength of bear cycle in bear market (cycle 1 and cycle 2) and strength of bear cycle in bull market (cycle 8) (strength indicator is the 3rd from bottom).
This is the reason why short-term shorting is not advised in bull market and going long short-term is mainly not profitable on bear market. Simply, there is no steam in contra volumes.

Back to our hero today, RIFIN, we start with C7. It was a double asymmetric cycle. C8 started on 15th of september and seemed to be eliminate in 8-10 trading hours (strength is above signal for 16th EOD, oscillator in neutral territory, sentiment is around 40 EOD). Nice setup for a bull continuation. 2 hours before EOD 16th there is a bearish attack with a weakening power eliminated bull volumes and made a pull back on sentiment. As we see, today morning this volume attack manifested in prices, with a small, exhausting price fall effect.

For EOD today buying volume could reach selling volume level and selling volume remain almost steady. (follow 5th indicator from bottom, the green and red lines)
What would you predict if you were asked?

Last 2 hours had a selling attack again, so tomorrow it will most probably manifest with a quick downward fall, then, if buy volume continues it will build-up eligible volume to push prices higher into the positive territory. Did you observe the positive price manifestation in parallel with bearish attack?
Yes, I am sure you know it already, it's a heads up signal for smarts to switch bull, so there is a chance todays EOD bearish attack will have no price manifestation at all.


Taking bull figures on 2 and 1 day  volume charts into account, we can order pretty high probability to this, daily charasteristics: nice up day with some correction after bell.

I'd like to emphasize this intra-day forecast needs almost continuous monitoring, checking figures 3-4 times a day at least and not the main subject of this blog.
The reason I've shown you the fight today is to compare this fight to the famous C3-C4 battle. Lower volumes, less damage on both sides.

Market changed dramatically.

GOLD
According to the latest figures, gold continues it's parade (3 cycle triple mirror bull on 1-day!). It's starting to be inconvenient me just to sit and wait for some correction. Having a take-off mode on a share or index makes very hard to determine exit point as volume and rather classic TA has not been designed for secular bull. In case of take-off mode, we will use our speculation skills.

So good luck tomorrow, I feel bulls will cheer!

Quick update

SPX:

I am just analyzing what happened today.
We had a huge fight in the backgorund, especially in the last hour.
There was a huge selling pressure has been eliminated just for EOD.

I need few more hours.
So far it seems today's trading day was used for further bullish volume insertion (!)
So far it seems, market is more stable than yesterday. Sounds crazy...

I feel 1130 is on the way, then I expect a small battle there.

On 60 mins chart I see a nice sum of buy volume waiting for manifestation.
I can imagine a 1-1,5% rise tomorrow.

I hope you already have your own account to marketvolume. It's free. Try it.

Parameters:

R3K 2 days:
SBV Histogram: 6,12
SBV Osc: 5,2

1 day:
SBV Histogram: 5,13
SBV OSC. 5,2

60 min

8,16
6,2

early morning I'll come back, need to verify my results.

GOLD:
Still bullish, but I see some traces of exhaustion. There will not be a big correction, we need more trading hours to predict better.

Cheers!