iCharts Discussions

[rk_a2003]

"ECB bond buying and Chinese stimulus plans fire and oil. Now wait for US Pay roll data. If it turned out to be a good number the momentum continues. Alternatively if the numbers are bad, still markets may go up after a brief correction hoping for QE3 in the backdrop of poor numbers."

This is what MMM posted a few days before. After a brief correction US markets again jumped up and also pulled up EU markets. Probably we may see a gap up opening tomorrow in our markets.

Considering the trigger events and probable effects helps you in your trading, They help you to be in right side or at least not to be in wrong side.


Still get prepared for the imminent fall in the future, which may not be very far away.End of The US presidential elections can be considered as the starting point for the count down. How long that count down can last?....It's not going to be easy to answer that.

[arvindeept]

[rk_a2003]

Thanks Arvind.

[rk_a2003]

Now Greed is reading 82 on a scale of 100.This is out of mere anticipation of QE3.

For some reason if there is no immediate QE3.What will happen? The American think tank are well aware of it. Even if there is no QE3 they will try there level best to appease the markets.

Still if an addict is not going to get his Steroid Dose. He/She may behave weird. How hard you may try to pacify Him/Her.

[vinay28]

with diesel price hiked by 5, more liquidity?

[rk_a2003]

The FED is in a real fix. With increase in Number of QE’s the potential danger of US$ being dumped by the world and replaced by other currencies or gold also will increases.

If it happens it can be considered as the end of ‘American Era.’ This must be the only reason that is holding back the FED from inducing another round of QE3; Otherwise U.S never hesitates to take a ride on the world.

[rk_a2003]

"The Federal Reserve launched another aggressive stimulus program on Thursday, saying it will buy $40 billion of mortgage debt per month and continue to purchase assets until the outlook for jobs improves substantially.”

A fixed shot for every month….ha…haa…haa. Why can’t they transfer fixed amount of money in to the accounts of the citizens every month so that they can buy everything under the sky? (That would have been a better option instead of buying mortgage debt every month).In this way economy would have galloped at least for a short duration.

Look at the precious metals Bull Run. Silver jumped 3.17% in a day.That’s what MMM anticipated months back. Wait! You have yet to see the real Bull Run in precious metals.

More and more trash being circulated in the system, to the new highs the precious metals will raise.

If it’s not US; The currency of that country would have been dumped in to the drains by the world.For the world it may take some more time to do the same with the US$ (They are in the process).

So, anticipate the global market rally for some more time, till the ground realities proves otherwise.(They will... If not today…. Tomorrow)

[rk_a2003]

Repeat the same mistake and expect the different results

What a successful trader do? She/he repeats her/his actions again and again to get the same positive result again and again over a period of time. It’s no secret .All successful traders knew it and advise it to novice traders.

What a novice trader does she/he repeat the same mistake again and again and expect the different result!

Now what FED is doing? It induced QE1 and expected the economy to revive…Economy never revived. It induced QE2 and again expected the economy to revive….oops …the result is same….Now again it induced QE3 on monthly basis till the economy revives. Shall anybody tell what is going to happen?

The only thing is…. it’s going to take some time to know the result. May be FED is simply borrowing time. Because it is hard to believe that FED level is not better than a novice trader’s, or else there is no other option available for the FED other than repeating the same ineffective measure again and again in a slightly modified manner.

[rk_a2003]

“It's not merely the fundamentals but their psychological interpretation by the market makers (which are anyway a few giants) which drives prices.”-Vinay

Well, FED, ECB,Central banks of various nations ….etc are doing the same…… they are influencing and controlling the ‘psychological interpretation of the market makers’. They are taking up a series of actions and assuring the market makers that all is going to be well. Otherwise it’s impossible for the Markets to reach these highs in the backdrop of poor Fundamentals.

Can they do it for ever without the improvement in the Fundamentals? I see fundamentals as nothing but …Demand (All fundamental indictors can be boiled down to DEMAND.). A sustainable and ever increasing demand only can keep this Giant prime mover on roll.

How can a system which sustain on demand and destruct that very demand to make their companies profitable survive? That’s the biggest contradiction of the modern society and the very cause of the cycle’s creation….The grand cycles. Within that grand cycle’s sub cycles controlled by greed and fear may develop.

The psychological interpretation by the market makers can diverge from the fundamentals for some time (that’s what right now happening) but not for ever. Simply it’s impossible( can a loss making corporation hire more people and increase the wages for present workers?).

The FED,ECB actions cannot be considered as Fundamental factors .They are mere Financial engineering manipulations trying to conceal the Fundamental reality..and they are bound to fail in the long run....history said it loud and clear.

[rk_a2003]

Some time back MMM posted a Nifty chart depicting Effect of QE’s on Indian market. An update chart is posted. From the chart it appears that nifty may test prior highs of 6300+ in case the effect of QE3 is at least at the level of QE2.However the recent decisions of the Indian govt. may add further momentum.

But, we can see from the charts that QE2 has less effective compared to QE1 if the same diminishing factor is considered then nifty may not reach 6300+. Considering the same, FED resorted to infuse Monthly dose of QE3 in to the system. Will this modification be effective?

However the Economic Data after a couple of quarters is going to be the crucial factor. Which indicates the path of the economy?

Till this time QE’s are successful in supporting the markets through liquidity but a failure in reviving fundamentals of the Economy. It was successful in creating demand in the equity market not in the real consumption and production.

We may conclude that the infused liquidity is going to take up the Global markets….. already they did. How long and till what point? …..Later after few years do we need to discuss about “How the QE bubble busted? “.

Well, it appears certain for me unless otherwise a technological breakthrough/ invention slingshot the world economy out of the recession.

[rk_a2003]

The reality started hitting the markets. Latest data of Japan exports shrunk. Chinese manufacturing continued to slide for the 13th consecutive month.It was similar in Europe, where regional purchasing managers index fell to a 39-month low. It showed the fastest contraction of new business and services in more than three years.

Crude sudden fall…Is it indicating the coming downfall of the demand?.

Market may shrug off and may go up again after a brief correction. Giving a reason …..”After all Stimulus was introduced few day’s back it takes some time to deliver. “Well that’s called Greed.

By the way, at the moment the Greed index is 91 on a scale of 100….. It’s extreme greed. Market can remain on extreme greed for quite a longer period. That’s how the tops were made.

[sonila]

[rk_a2003]

Not necessarily. When unlimited money is chasing limited shares the way forward is up and up at least for few quarters, once the reality struck hard in the form of poor economic indicators market may start sliding….for that still some time is required.

These are the economic indicators released yesterday in US.

• First-Time Jobless Claims to U.S. Leading Index Add to Weakness.
• Philadelphia Area Manufacturing Shrinks a Fifth Month.
• Household Worth in U.S. Declined in the Second Quarter.

Can we see any positive trend of economy in these indicators? definitely not .We only can see deterring economy. But, US markets stood like rock and even Dow managed to close slightly positive.

The joke is some analysts saw the signs of recovery in Philadelphia Area Manufacturing data. You know what the data is it’s -1.7 .The minus sign denotes shrinkage. We may wonder how on the earth any one can see sign of recovery in a shrinking manufacturing.

Last month shrinkage is -7.1, therefore analysts sensed recovery. Well, that’s how the news is interpreted in the backdrop of QE3.

“You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”

[pkholla]

RK: The eye "sees" something and the brain interprets it as per its wishes. That's why for many years, scientists' eyes saw 23 pairs of chromosomes, but the brain saw 22 because a famous English scientist said so! Similarly, the public sees in charts and data what it wants to see. That's why both sides of a share transaction are likely to be happy with the deal. If u r an optimist, -0.7 is better than -7.0! Prakash Holla

[rk_a2003]