Hey Folk
Next week we will have the FOMC meeting on 15 and 16. I think the rate
will rise on Wednesday which is on the 16. Stock market will rally.
This week I will use some charts to illustrate what is happening.
The S&P500
This is the monthly chart of the S&P500 we are looking for long term
when we look at monthly chart.
The MACD are showing little divergent for the current up move, which
mean it may turn to downward movement. ADX are also showing that there are no
strength to the upside. However it can also be the case of the circled area in
2011. Where market still turn up.
Next the relationship in weeks between bonds and stock.
There is no sign of collapse in the bond market. Look at the
fundamental, the COT, commercial are buying into bonds heavily. Which may translate
that the bond market will go up higher. This may temporary depress the stock
market a little ( I do not mean crash )but will lift the stock market up again
due to the relationship. Study the chart carefully to find the relationship.
COT data for stock are showing buying activities. Yield curves have not shown
a zero or negative gradient yet. So the up move in the stock market are still
intact in my opinion.
Last chart, is the relationship since 1970s of US dollar, oil and gold.
Dollar rise will depress gold and oil. It happen in the 1980s. See the
similarity we are now and 1981. Currently the 3 instruments are crossing each
other in term of sigma. This further explain that gold and oil are having
downward pressure. These also coincide with the raising interest rate in the 1980s
period.
History never change because human never change. But history may not
repeat itself in a timely fashion.
Cheer
