Monday, 25 October 2010

SPX - Shooting Star likely to end "quantitative squeezing"

SPX produced a shooting star on the daily candlestick charts. This in itself is not a confirmation that a sell off will start immediately but more often than not reversal patterns commence after a shooting star. TMN would not exclude a retest of the top before the SPX finally rolls over, in any case TMN wants to give the current candle stick set up the benefit of doubt that we are dealing with an important top. The market has been advancing in extraordinarily steep fashion within a very short period of time (150 pts in 7 weeks) and, let's face it, the upswing came basically on the idea of renewed money printing by the FED and nothing else. TMN thinks the US are not quite anywhere near Zimbabwe yet but of course, should the FEDs go for the nuclear option, it will end just like it. Anyway, a clearer signal in favour of a top at these levels would be visible should the SPX produce a few closes below the mid Bollinger Band (currently @ 1165.09). A hint that these closes below the mid BB lvl will materialize would be given if SPX 1171.5 got tagged any time within the next few days. TMN can't wait to watch the movie plot unfold...

                 click on chart to enlarge


  1. Hi love the site btw.

    You stated above "on the idea of renewed money printing by the FED".

    Have they not been doing it? I see this POMO days, etc.

    tia, Jim

  2. Hello Jim, the answer is yes and no. The POMO day stuff from August 2010 relates to the maturing stuff. Therefore, essentially all it does is keeping the amount of total holdings more or less constant, let's call it an extension in time of QE1. QE2 however, or the expectation of it, has been the major driver of the recent advance in equities. We are all ears to hear the FED call a number and time frame on this...

  3. Well said. Thanks