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Fed – Extended Period

Written by Macro Story
February 7th, 2011

The Fed has clearly stated its policy regarding the Federal Funds rate with each monetary statement

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

Let’s take a look at other rates which are less controllable by the Fed as witnessed by changes since August 2 when hints of QE began surfacing.

1 Month: gained 1 bp (basis point)
6 Month: gained 2 bp
2 Year: gained 21 bp
5 Year: gained 63 bp
10 Year: gained 67 bp
30 Year: gained 67 bp

So the shorter end of the curve the Fed has managed to keep rates low but as you move further out on the curve rates have clearly moved up in the face of a monetary policy intended to keep rates low. If you remember when Bernanke gave his 60 Minutes special he clearly says at 6:45 in the video – “What we are doing is lowering interest rates…”

Clearly QE in the eyes of the Fed is not working and they know that. They have shifted the bar of success to equity performance but don’t lose site of the Fed’s failure to achieve a low interest rate environment for an extended period. They have in fact lost control of the yield curve beyond one year.

Recently Fitch issued a report that 30% of commercial real estate that needs to be rolled in 2011 do not meet their standards.

Residential mortgage is negatively impacted by rising 10 year yield.

Regardless of what Bernanke may say publicly about the success of QE they understand its failures and they understand the extreme negative impact rising interest rates will have on future growth, bank balance sheet risk and credit formation.

Listen to Bernanke in the video below discuss employment. He’s very concerned and this was only two months ago. Either QE is going to occur for the 4-5 years he says it will take for unemployment to come down to acceptable levels or the Fed will be looking for a way to save face while exiting future QE. If this move in rates continues, the bond market may very well set future monetary policy and NOT the Fed.

Bonds, Commentary, Interest Rates, Markets, Treasury/Corporate Ratio, Video | No Comments

Count Almost Complete

Written by tywo
June 28th, 2010

Charts, Commentary, Market Indicators, Markets, Video | No Comments

Back To The Future

Written by tywo
June 6th, 2010

Charts, Elliott Wave, Market Indicators, Markets, Video | No Comments

Exploiting The Exploiters – Working With Algorithmic & Program Traders

Written by Bala
June 3rd, 2010

Click here for VIDEO
Trade Details:
THC, Tenet Health Care
Reversion Trade Strategy aka The Bollinger Band Crash Trade
Time in Market: Less than 17 Hours
Profit: +7%

Commentary, Market Profile, Markets, Video | No Comments

Last Low Looks Likely

Written by tywo
June 2nd, 2010

Charts, Elliott Wave, Video | No Comments

Squeeze Higher or Do We Roll Over?

Written by tywo
May 25th, 2010

Charts, Elliott Wave, Foreign Markets, Video | No Comments

Gold, Silver and S&P 500 Trading Charts and Video

Written by C. Vermeulen
May 16th, 2010

Last week was amazing for both gold and index traders as gold surged higher and the SP500 tested a key resistance then fell 4% in our favor. The past couple weeks with the mini market crash and Euro issues making the market extra volatile both gold and the broad market (SP500) index has been wild.

The added volatility makes trading more difficult because price patterns become less predictable and price movements are much larger increasing risk for traders.

Below are the charts & videos of what to look for in the coming days…

GLD – Gold ETF Trading

Gold continues to trend higher at an accelerated rate. Friday we saw gold pullback and test a key support level then bounced to close in the middle of the days trading range. As you can see the trend line support has become very steep and once the trend line support is broken I figure there will be a sharp drop to digest the recent rally.

Gold SPDR

SLV – Silver ETF Trading

Silver popped and tested a key resistance level from a previous high as expected. It also tested the top of its trend channel providing even more resistance. This week will be interesting as we wait to see if precious metals have a small pullback or continue to rally.

SILVER ETF

SPY – SP500 Index ETF Trading Chart

This chart clearly shows what I think is about to unfold by looking at the past market drop. Because of the mini market crash triggering everyone’s stops already I figure we have made the low and the dip we are seeing now will drift down a few more percentage points then bottom out

S&P500 SPDR

ES M0 – SP500 Mini Futures Trading Setup – Pre-Drop

Below is a chart of the SP500 which we shorted or bought the SDS bear etf trading fund last week looking to profit from a falling stock market. As you can see from the chart we saw the es mini contract drift into a key pivot point on light volume. What this means is that a large group of sellers will be waiting at that price, and because volume is light we know there are not many buyers at this price level. Simple supply/demand comes into play with more sellers causing the price to stop rising and eventually force the price lower which is what we were anticipating.

The green arrows show key support levels on the 60 minute chart where 1/3 of a position should be taken of the table to lock in gains which also reduces overall risk on the trade. Once we cash in the first 1/3 of the position we move our protective stop the breakeven which is the entry point for the remaining portion of our position. This turns the trading into a winner no matter what happens allowing us to enjoy the ride…

S&P Mini Futures

ES M0 – SP500 Mini Futures Trading Setup – Current Price

Here is the same chart 24 hours later showing both of our profit targets triggered pocketing 2/3rds of our position for a very nice gain. Depending on the type of trading vehicle you traded there was potential to make up to 150% return in less than 24 hours.

We currently hold 1/3 of the position left with a loose stop allowing the trade to mature incase the down trend continues for several days or weeks. If not and the price rallies then our stop will get triggered for small profit on the balance of the position. Either way we win.

S&P Mini Futures

Pre & Post Market Correction Video: http://www.thegoldandoilguy.com/articles/sp500-market-correction-trading-videos/

Stock Market ETF and Futures Trading Conclusion:

In short, the market is trading on increased volatility making it difficult to find low risk setups. At the moment we are long gold and short the SP500 with both position deep in the money. All we can do now is manage our positions to make sure we maximize our profits.

If you would like to Get My Trading Signals be sure to check out my services at: www.TheTechnicalTraders.com

Charts, Commentary, Data-Based Indicators, Market Indicators, Market Sentiment, Markets, Precious Metals, Video | No Comments

Slight Adjustment to Elliott Wave Count

Written by tywo
May 14th, 2010

Charts, Commentary, Elliott Wave, Market Indicators, Markets, Video | No Comments

Bulls Buying the Dips

Written by tywo
May 13th, 2010

Not much to really say except the chart and video from yesterday is holding well so far. There are no signs of sellers just yet and trying to rationalize why the market will not rally is only a recipe for losses in my humble opinion. The trend is up, so why not avoid the hype and trade with the tape until it shows different? I believe the market will hit the 1205 area before seeing any significant pullback (see chart below).

As for the ASX, same same, but different. we are still in wave 4 and i think we could see 4700 – 4750 before we head to new lows (only a slight new low) to mark the end of the drop.