WATCH OUT FOR SUMMER SWOON

Posted on Posted in Daily Blog Post

20130711

MARKETS ARE ON A TEAR now AND WILL LIKELY TEST THE double top OR pushes to new BULL MARKET HIGHS. JULY historically skews toward POSITIVE. Will it get to all these levels?

Federal Reserve Chairman Ben Bernanke has always produced 2 different impacting factors whenever he speaks– One is Bernanke’s death factor (QE’s taper) and the other is ‘Bernanke’s Viagra factor (more QE). Both factors used to cause the market –gold and stock to move in a big way.

Yesterday Helicopter Ben said that the world's biggest economy may continue to need stimulus in contrast to the time in May when he sparked a stock and bond rout after signalling the Fed's asset buying program could be tapered. Minutes of the Fed's June meeting showed that while "several members judged that a reduction in asset purchases would likely soon be warranted," many want to see further improvement in the labour market before reducing the $85 billion-a-month quantitative easing program.

He further said that ‘The Federal Reserve will not be in a hurry to raise short-term interest rates, even after the unemployment rate comes down markedly.

I am quite convinced the market participants are over-reacting to the news above. Whatever the case to be, I believe he will spook the market one more time like the time in May. I still believe initial tapering will be introduced soon but it will be only one off. Helicopter Ben will then re-introduce massive stimulus when they see that unemployment is creeping up rather than coming down.

Market Action

As reported in my newsletter (that was delivered to my members), I expected the market to move in new up leg. But how long can it lasts? See the chart below.

20130711(2)

  1. It crossed back over 50 daysMA.
  2. MACD turns bullish
  3. Breaks 50% upward retracement – 15060
  4. It touches trend line and RSI is getting bullish
  5. Projected to reach 15700. It reaches P (midpoint between C and D) 15133. Need to cross over P convincingly. Will it reach 15700?

Now the questions need to be asked: Will Dow and SP continue to push higher from here? Or is it time for you to sell into rally before the upcoming major or panic correction? Should we prepare to short from higher level? When is the time to short? Or rather continue to hold.

What about USD? USD is giving us the second time opportunity to go Long. Where is the entry point and when to enter? Refers to my newsletter.

What about Gold? The bottom is in? Time to buy? Refers to my newsletter.

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