Hello All!
Hopefully you’ve had a positive trading week!
Some updates
There will be no weekend report this week. The writers are off this week and are hopefully getting much deserved rest.
The stock charts are being diligently updated as time allows.
https://stockcharts.com/public/1269446/tenpp
Also, I’m interested in everyone’s input on what could be done going forward. Anything from layout to design, ease of comment reading, potential guest reports, as well as things that might not have crossed my mind yet for the blog moving into the future. Please comment below any suggestions.
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If you’d like to become a part of the OEW Group or learn OEW continue reading. If not happy trading!
Over the past four years we have been compiling additional verified and quantified observations in the various markets. As a result, the 2019 lesson plan has been expanded to thirty lessons, with nearly all real time charts.
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the ELLIOTT WAVE lives on 
Wags, that news story was first posted at 5:41 AM Friday morning and up until then bonds had been declining overnight. Bonds bottomed on the initial take on the jobs number at 8:30AM then rallied SHARPLY on the 2nd glance at the hourly wages component of the release. The updated version of the news story at 9:08 AM should have corrected this headline as they were flat at that time.
Bond futures finished the day in the green with the 30 year + 0.21% and 10 year + 0.05% from the Thursday close and both up dramatically from the 8:30AM lows.
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I’m long the on the run long bond here
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phil1247 says:
April 5, 2019 at 6:52 am
here are todays up to date fibs
i didnt change the old fibs on the daily chart
bounce possible at these extreme levels
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
and BOUNCE bonds did from the -618 target on chart shown before
it was a short squeeze looking for any excuse to happen
no matter what the news was….
if you were holding short at those extreme levels
you were asking to have your head handed to you
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My close personal friend Colin Twiggs sent this to me. He says no sign of a recession.
http://tradingdiary.incrediblecharts.com/trading_diary.php
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Thanks spy
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Ha the FED didn’t even see a recession at beginning of 2008
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Bernanke: Subprime Mortgage Woes Won’t Seriously Hurt Economy
AP
Published 9:54 AM ET Thu, 17 May 2007
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
the FED has always been clueless
and they remain clueless to this day
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Could a conventional take of the ASX 200 be of any use?..
https://wavecount.blogspot.com/2019/04/asx-200.html
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Hi,
Dow broke a triangle,if confirmed the expected target is ~27500
https://invst.ly/ah4p8
https://invst.ly/ah586
Ciao
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Phil, why did you post earlier today that both stocks and bonds rallied?
That couldnt be further from the truth.
The yield on the 10 year surged to nearly 2.54%
https://www.cnbc.com/2019/04/05/bond-market-treasury-yields-rise-us-china-trade-jobs-data-in-focus.html
For someone that claims to be such a successful trader and following so many markets (with many posts about easy money being made in bonds), I’m seriously beginning to genuinely question your “bravado” given some terribly wrong claims that you’ve recently made here.
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FED balance sheet in meltdown
STOCK prices in melt up
see how this works now ?
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thought QE ended years ago. or is that PPT’s personal savings account
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just wanted to show the incorrect information
that was given here
that fed Q T results in stocks going down
its obviously not true
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Actually, the only thing your post shows is that you have zero understanding of how the market works. I realize that you’re just a scalper who is only concerned with what the market may do in the next 5 minutes, but the professionals who trade and invest the $23 trillion of market cap are always looking 6 to 9 months out into the future. They do that by analyzing fundamentals and taking heed of Fed policy.
As was explained to you throughout 2018, both the fundamentals and Fed policy presented a serious headwind to the market, which is why it had such a horrible year. QT began in earnest at the end of Jan 2018, and it immediately caused a 10% decline in 10 days. Then the market spent the next 8 months struggling to swim upstream against the current, but the current kept getting stronger each quarter, and the headwinds turned into a Cat-5 hurricane at the start of October. Not only did the QT cap increase to $50bn/month at that time, but on October 3rd, the Fed Chairman said the following:
“The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don’t need those anymore. They’re not appropriate anymore,” Powell said. “Interest rates are still accommodative, but we’re gradually moving to a place where they will be neutral,” he added. “We may go past neutral, but we’re a long way from neutral at this point, probably.”
Powell later said that QT was on “auto-pilot.” So, what did “auto-pilot” mean? It meant that all systems were “go” for the Fed to continue to roll-off assets until the balance sheet was reduced to $2.5 trillion. That meant that QT would be continuing for at least another 30 months.
What happened to the market after Powell’s comments? Stocks immediately crashed 20%. They were never even 1 penny higher. Then, on January 4th, Powell did a 180. He indicated that not only would rate increases be put on hold, but that QT would end in September 2019 with the balance sheet around $3.75 trillion. What happened to the market after Powell’s 180? Stocks immediately rallied 18%. They were never even 1 penny lower
So, the chart you posted has nothing to with what the market has done, because it doesn’t show what Powell said on 10/3 and it doesn’t show what he said on 1/4.
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fed is irrelevant
i pay no attention to anything they say
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Yes, everyone who reads this blog knows that you repeat ad nauseam that the Fed is irrelevant to your 5 minute scalps, but the Fed is the most important factor of all to the people who invest the other $23 trillion in the market. It’s impossible to dispute the fact that the 20% decline that began on 10/3/18, and the subsequent 18% rally that began on 1/4/19, were 100% due to what Powell said on those 2 days.
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Michael, I’m just curious where your market perspective is now. Are you still somewhat bearish or has anything in the market changed your perspective as of late. You may have posted recently and I may have missed it. I know you had been dipping in and out of shorts the last few months.
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market, I haven’t posted in a couple of weeks. Been busy, plus I lost interest in this blog because it’s become nothing more than a daytraders’ chat room. I’ll try to post something before Monday’s open.
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+100 aah.
Actually, for anybody to say that this is a good environment for investment is most likely a form of malpractice (assuming that person is an investment professional of any kind.)
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Thanks AA.
I wasnt going to waste any time pointing out the obvious.
For someone who claims no interest in Fundamentals and says that the FED doesnt matter….only to post a chart of a melt-up in stocks during the FED’s QT, is beyond any logical thought or comprehension.
Bottomline:
Not only has the FED done a complete 180 since Dec. 19th, but they also went out of there way to tell market participants that:
A.) There would be no interest rate hikes in 2019
B.) QT will end in September.
C.) QT will taper in May.
Naaaaa.
None of those things would cause portfolio managers to aggressively buy equities.
😀
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aah, tom and wags, better question is how do we get out of this vicious cycle? we keep backing ourselves into a corner. can’t raise rates because stocks will go down 20-40% so FED keeps pumping up stocks. yet usa has run up $1 trillion deficits for 10 years. Will bond holders eventually demand higher rates for the $22+ trillion of debt?
if rates on 10 year ever go to 5 – 6%, we are in trouble. nearly half of tax revenue will be needed to just pay interest on the debt.
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That’s exactly what’s going to happen.. if anything I think the Fed will be disappointed that SPX is back at 2900 and possibly breaks even higher, this perma bid will be concerning to them I imagine. They just wanted to do enough to stop the rot. Sky high markets make it hard to justify easy policy and then the cycle starts over. These markets are broken in that weak economy equals higher stocks through looser policy. Stronger economy means lower stocks through tighter policy.
It’s inevitable that investors will lose faith in central banks and then all hell breaks lose. Even if it doesn’t happen right now, it happens down the road because people have had enough of socialised markets which benefit the 1%. That’s why you’re getting all of these crazy ideas from people on the left around MMT and other stuff. I’d imagine that would be a vote winner as people at the bottom will feel they deserve something for free given the rich have been getting something for free… riskless asset markets. So things are going to be shaken up if they stay as they are, especially given the ratio of GDP capital receives relative to labour is at 100 year highs.
Things are crazy right now
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mcg, i don’t get the new mentality from many so called finance experts (even buffett) that say gov’t debt levels don’t matter. If so, why haven’t we been running up more debt? ask people in Greece if debt matters.
my guess is FED will keep rates low for decades. Look at Japan 30 years of rates at 0 or negative but can’t get any growth.
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I think they matter a lot, it’s only been serviceable over the last decade through low rates. But the US is different or Greece or Japan because Greece doesn’t control its own currency, and Japan has weird demographics (very low birth rate and hardly any immigration), plus an economy focused around exporting consumer goods in sectors where prices keep falling through innovation and competition, so their economy is naturally deflationary. US is bigger, more diversified and so has better prospects. But if the budget deficit stays this wide, either taxes go up directly or monetisation is inevitable at some point and that’s basically a dollar devaluation.. could be disruptive, and is basically a stealth tax. Think they’ll end up down that route
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It did.
Their Balance sheet has shed roughly $523 Billion since it started the QE unwind in October of 2017. The Fed’s balance sheet is back to where it was in mid-December of 2013 at $3.93 Trillion.
Since the beginning of the unwind, the S&P is +13.4%
From roughly 2550.
But I wouldn’t try to claim that there is any kind of correlation between the Fed selling off Treasuries and Mortgages…. and a rally in stock prices. That would be pretty bizarre and literally make no sense at all.
What has clearly caused this rally is a 180 degree change in Fed Policy since December 19th of last year…. when the S&P closed at 2507.
‘
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( above reply was in response to “thcconsulting” )
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The FED doesn’t sell Treasuries to reduce their balance sheet. They buy less, as previous bonds expire.
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You are correct Kingfrog.
They simply “run-off” and mature.
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Phil I agee with you 100%! Beautiful observation. While markets are temporarily interrupted by unrxpected news, the trends stay in place as market psychology doesn’t change over night and pschology drives the markets. The Fed is irrelevant on a macro scale as global bond markets dwarf it and drive it. The Fed can ONLY follow what the massive global bond market dictates it to do. To y spoke of this. Prechter proved it in his book etc… Great chart Phil…
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thanks tommy
prechter gets a lot of flak
he made a historic call for the 1987 stock market crash
but went astray after that
regardless .. the one thing i took away from him was
NOTHING can change the trend
the trend has been up since jan 4
when the first extension appeared
people who tell MS Market to go down
because of tariffs… fundamentals …earnings.. scandals etc
when she doesnt want to go down
have found out that she slaps pretty hard
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I as well only took a nugget or two from Prechter – and one of them was that bond chart – Fed follows market. Charts can’t lie! 👍🏼
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