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Tuesday, November 9, 2010

Tuesday, After the close!!!!

BKX is not participating nearly as much as the major indexes have been in this rally, and with-out financials this rally is not sustainable, nor healthy long-term.
The SPX had a down day that was printing lower highs and lows for the entire trading session and at one point dropped below the support of the median channel line, then closed right on it. There is a good chance that we had a failed 5th of some sort, but is still too early to know how serious this sell-off could end up being because we could be working on another 4th wave, bullish longer-term, or the small possibility that we are starting into an impulsive wave down, bearish longer-term. The lower channel line is still solid support that has been respected multiple times, but a break below it would open the doors for a much larger sell-off that would start with a challenge of the previous low at 1183.56.
Breadth closed at only 2.68:1, decliners, not near high enough to give a lot of weight to the beginnings of a larger sell-off in the works

The Dollar had another outstanding day and at one point was above $78 printing its third large green candle in a row, unfortunately the implementation of QE2 may soon throw a wrench in any possible new up-trend.

Yummy, Apple pie!!!
Lets think of that Apple pie as the value of Dollars in circulation. As the FED prints more Dollars, the pie stays the same size as each dollar is worth less because the FED is printing more Fiat money, add not adding value or worth into the system just diluting the value of each Dollar. Just as in Apple pie, all the FED is really doing is making each slice smaller, so there is more slices to go around, and hoping people do not notice the size of there slice is smaller, because if they do, there might be riots on the streets. fortunately QE2 is not escaping the worlds view and overseas Governments are standing up and sounding alarms, unlike what happened with the implementation of QE1.

Just today, China’s Dagong Lowers U.S. Credit Rating on Fed Monetary Policy

The credit outlook for the U.S. is “negative,” as the Fed’s plan to buy government debt will erode the value of the dollar and “entirely encroaches” on the interests of creditors.

This move could be the first towards more Credit Rating Agencies following with lower their outlooks that could result in sending the Dollar into a tail-spin and Yields on our treasuries higher as the world senses major inflation on the immediate horizon that would squash any hope of growth here in the United States and send shock waves around the globe as other Countries try to counter-react with their own Currency to save their import/export markets. Lots all hope this is only a political move and not the start of something larger
Enjoy your pie, what little is left!!!!

1 comment:

  1. Hummm, nice analysis. I can almost feel the cinnamon flavour out of it.