If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Wednesday, July 13, 2016

Daily update 7/13 Helicopter money

I want to show SPY tonight so we can get a better look at the recent price bars.

The last bar is a perfect hanging man.  The prior two bars are almost another hanging man and almost a shooting star.  Both are close, but neither perfect.  None of the three bars that constitute the break out to new highs in SPX are bullish looking.  Breadth was slightly negative at -53%,  New highs tumbled down to 216.

The futures traded in a narrow range overnight and today.  ADX is up to the point where the market often retests the high on the first pullback.  Just keep in mind that it can reverse sharply sometimes.

I think the 2130 level is key for SPX.  If the bulls are truly running they should step in and buy on any dip back towards that level.  A close back below there gives us a failed break out situation.  A close back below 2100 is likely to usher in considerable selling.  The VIX dipped down below 13 again this afternoon.  It closed at 13.04.  Will the bulls keep on buying? 

This is an interesting primer on helicopter money if you are unfamiliar with it.  Why Helicopter Money Won't Push Stocks Higher  When politicians are asked about the high debt levels the usual reply is we will grow out of the debt.  When asked why we do not cut spending they say we can't because it will hurt the economy.  Being relatively versed in elementary mathematics I can say without a doubt that one can not "grow out of the debt" until one stops adding to the debt.  Helicopter money will only make the debt grow faster.  Once started it will be like government spending.  They will say we can't stop because it would hurt the economy.  In the long run it will not solve anything and will actually make the problem worse.  At some point the bond market will lose confidence.  If you don't know what happens then take a look at Greece.  No country can add to the government debt level forever without blowing up.  However, each country is different in how much debt can be added before the so called "bang moment" (popularized by the book "This Time is Different: Eight Centuries of Financial Folly).  Past history suggests it is better to cut spending and take your lumps rather then wait until it is too late.  We need leadership with the guts to make the hard choices.  Explain the situation to the citizens and take action.  Otherwise, some day it will be too late and very unpleasant.


No comments:


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