Mr. Market decided it wanted to suck in a few more bears as overnight weakness created a buying opportunity this morning. Stocks ended higher after minutes released from the latest meeting of the Federal Reserve showed that the central bank is ready to stimulate the economy. The Fed said that it was concerned that inflation was too low and that it would most likely keep its promise to buy bonds to encourage borrowing. This rally has been powerful and the U.S. dollar has continued to decline as the Fed and other central banks have inflated asset prices because of the Quantitative Easing programs started in July. However, we do not trade what we think and as professional traders, we trade what our charts tell us. Attached you will find a chart of the SPY. Again, if you have been on the right side, you have made a lot of money and for that, we congratulate you for sticking to your plan. This is what we do. As we have stated before, we are not worried about trying to call the top as there will be plenty of time to jump on the reversal.
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Right on Rampage. I love these charts.
ReplyDeleteThis market has continued to rise (in the face of many conventional over-bought and negatively divergent signals) ...largely because liquidity inflows have been expanding. There are 3 possible sources: 1) the Fed, 2) foreign investment entities or central banks, and 3) large Wall Street firms such as GS.
ReplyDeleteIn a market, where conventional indicators are of diminished value and the sources of liquidity are camouflaged, playing the chart becomes even more important.
Well said Stephen.
ReplyDelete