Monday 3 November 2014

Starting the month outright bullish

US equities start a new month in an outright bullish posture, having ramped from sp'1820 to a new historic high of 2024. However, underlying price momentum is STILL swinging back toward the equity bears, but a break <sp'1900 before year end looks very difficult.



Suffice to say, with new historic highs, it is somewhat pointless to argue for a broader bearish outlook... and indeed, for the moment... I will refrain.

However, it is notable that despite the ramp into early November, the underlying MACD (blue bar histogram) continues to tick lower, and it is indicative that this market is way overbought, having not had a decent 15/20% correction, since the giant up wave from Oct'2011.

For the moment, sp'1900 looks to be primary support. Sure, if that fails, then the 1700/1600s are again viable, but right now... with the JCB AND the Japanese Govt' increasing their purchases of bonds and stocks (domestic AND foreign)... there is an underlying bid to most world equity markets.

It really is a case of the JCB picking up the slack from where the US Fed have left off.

sp'monthly8 - US QE phases

As we saw in mid October, it does not take much to spook the Fed officials, with Bullard being wheeled out for 'psychological support'.

The real question should arguably be... just when will QE4 begin next year... what will they be buying, and how much?