Another fun day and I have to admit it, I called it! I was speaking to my University of Utah Forex Class and I said, the Fed can turn on the faucet at any time. Meaning good news is good for the equity markets and bad news is good for the economic markets.
You want examples? The equity markets scream to the upside as unemployment claims rise and the equity markets can't go down when we print a well below expectations headline unemployment number.
So as a result of the recent Fed meeting, we have them pondering QE3. No crap! If there aren't any jobs being created and they backed themselves into a corner by saying we will support the stock market, the only way to do that is with easing. I am not worried about QE3, but what worries me is QE4, QE5, etc.. Just the fact that QE3 is mentioned should tank the equity markets, because things are so bad on the unemployment side that they have no choice but to intervene.
I say go ahead and let them do it because eventually, the markets will be so over-inflated that we won't crash, we will just go sideways for about 10 years and that will be worse than crashing and rebounding, crashing and rebounding. That will be stagnation or worse yet, stagflation. I can't wait for those markets!
To today's markets and due to the late day equity rebound and then subsequent fall off, we had a BUFFALO BOUNCE in the EUR/USD:
Past performance is not indicative of future results
I teach on the principle that the markets will give you a second chance. Well, the GBP/USD gave us a second chance. Check out the double top on the next chart and notice the horizontal red trendline. See in the second chart how after breaking through support and closing below it yesterday, we go lower today, only to rally and retest it and bounce off of it. Old support gives us new resistance:
Past performance is not indicative of future results
Past performance is not indicative of future results
Not much to report in the equity markets as we are relatively sideways since yesterday's close. I admit it, I am not sure if I am bullish or bearish. Are we only retracing down a little bit and ready for a rally? Or, are we not taking back much of yesterday's losses and getting ready to go lower? Why am I not confident in calling the direction? Here is why:
**two days of inflation data (not sure if it matters)
**two days of Bernanke
**retail sales
**unemployment claims
**some earnings data
That is a lot of data and to call the affect of it now is absolutely absurd. I am hedged (as always) and fundamentally I am bearish, but "gasp" technically I am bullish. Should be a fun three days!
Happy Trading and Be Environmentally Cool
Coach Brian
Online currency trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose
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