Week in Review: Consolidation is expected

greenback · 发表于 2013-7-13 03:10 PM

本帖最后由 greenback 于 2013-7-13 04:16 PM 编辑

So the equity indices broke out as we predicted based on the price actions in the last week's report. Major US indices closed the week with all-time highs. Some indices also broke intraday all-time highs. These are all bullish signs. Hope you enjoyed the ride in both your trading account and your retirement account.

As we argued last week, the rapid rise of bond yields may spoil the global economy and the FED has to say more to calm the market. Indeed, Ben did just that, and we had equity and bond rallied back because of his "dovish coco". Indeed, there is no fundamental change in the economy and the corporate earnings.

Looking ahead, both the weekly bars and daily bars are at the BB upper bound. It is unlikely that the market will shoot up nonstop. Side way actions are expected in the following weeks. However, this is not for investors/traders to open bearish positions unless you day trade. Nevertheless, risk also exists for bullish positions.

One news that may cause a dip is the Chinese GDP, which has been rumored to undershoot. So the Asian hours Sunday night might not be good looking, but remember it is the US economy that matters the most. In the past, we often had reversal during US trading hours when Chinese data was lousy, but this was not always the case. The second news is Egypt and the CRUDE price going up too high too fast. This will cause both inflation expectation to rise, which give naysayers more excuse to reduce QE faster in the FED, and the consumer sentiment to go down, which pressures consumer discretionary section, a major leader in this rally. These are both negative for equity indices.

greenback · 发表于 2013-7-13 03:17 PM

Daily equity charts:

greenback · 发表于 2013-7-13 03:21 PM

We can only hope bond investors will stop the bleeding for a few months ... we only had hope left but nothing else. The price actions are apparently not bullish.