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Tuesday, May 10, 2016

Daily update 5/10 NIRP

I got the site banner finished today.  I didn't have the time yesterday.  It looks a little more like a stock chart now.

Funny how the bulls show up nearly every time I say they need to.

Today closed slightly above the 20 SMA which was my target for a bounce.  There is the potential for a head and shoulders top now.  This could end up a full retest of the rally high though.  I could not discern any reason for the buying except that oil was going up.  I believe oil was going up because of the Canadian fire.  Its kind of hard to say if there will be any follow up.  Breadth was a very strong +73%.  New highs increased a bit to 254.  New lows dropped down to 18.  I think there was a lot of short covering going on today.

The futures reached the upper channel line.  They also popped back up into the prior resistance area.  There is an area of congestion from back in April that could be significant resistance.  

The strength today was not enough to get a positive cross for the green count.  This is more or less neutral.  Another up day tomorrow would fix that for the bulls.

Today turned SPX's short term trend neutral, but not the other two.  I can't say whether there is much more upside coming or not.  I don't have anything that indicates the bulls have full control of the market.  I can also see there could be some significant resistance around here.  Will oil continue to rally?  It has not cleared all its resistance either.  The COMPX is clearly weaker then SPX lately.  That tends to favor the bears normally.  Today could be nothing more then a fake out that flushes out a lot of shorts and clears the deck for the decline to continue.  The bounce is fragile the bulls need to keep upward pressure going if we are to retest the rally high.  I am not sure they up to the task.  I guess we will see.

I had a debate with a friend of mine a while back on NIRP.  He has been adamant that negative interest rates are coming to the U.S.  I take the other side.  I firmly believe the FED has absolutely no intention of implementing them here.  Here are some articles on the subject.

NIRP Kills Off All Money Market Funds in Japan
The NIRP Hail Mary
Negative Interest Rates: A Tax in Sheep's Clothing  This one is from the St. Louis Federal reserve bank itself.

My main argument (besides the entire idea being stupid) is that by the time things get that bad here it will be clear that NIRP failed in Europe and Japan.  The money market industry would be crushed and it is much bigger here in the states then anywhere abroad.  That in itself could be why the FED seems to have no interest in NIRP.  Yellen was asked about NIRP when she testified in front of congress recently.  Her reply was that the FED had not determined if they could legally do it.  They had no plans to start up research on that topic at this time.  That seemed like a pretty clear sign to me.  I guess we will see.

Thanks to everybody that commented on the new look for the blog.  Luckily nobody said it sucked!
If you find the blog useful please share it with others.  The more the merrier.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.