Tuesday, June 5, 2012

CRB Commodities Weekly Chart Deflation Opens Door to Quantitative Easing

The long-time readership remembers Keystone highlighting the blue C&H (cup and handle pattern) in 2010 which played out in textbook fashion.  The bottom of the cup is 200, the breakout level is 285, the target is 370 which was tagged in early 2011. The red rising wedge, overbot conditions and negative divergence then created the April 2011 smack down. Price is now moving thru a downward-sloping channel (thin red lines). The 20-week MA is under the 50-week MA which is very bearish. The 200-week MA is sloping downward also very bearish. The indicators are also weak and bleak and agreeable to lower prices moving forward.

The quantitative easing measures are highlighted. Deflation was firmly in place in early 2009 as well as summer 2010 which caused Chairman Bernanke to drop money from helicopters. Last Fall 2011 was a surprise since the LTRO's goosed the markets before the markets were allowed to fall further. The central bankers were smart in trying to pump the markets before any serious trouble began, but, their strategy collapsed over the last month, so they will need to go back to the drawing board.  We have now slipped into deflation again so the current black box identifies the area where the global intervention with QE3, LTRO3, China stimulus and other nations' stimulus, will likely occur. QE3 may occur at any time between now and the FOMC rate day announcement on 6/20/12. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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3 comments:

  1. AnonymousJune 5, 2012 at 7:20 AM

    Hello Keystone,
    QE1,QE2 and OpTwist did not have the political background we have this year due to the election. It is possible they can do QE3 closer to the election for the best bang for the buck. China already said they are not doing stimulus. Any opinion? thx for all your work on the site. Extremely helpful.

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  2. Keystone SpeculatorJune 5, 2012 at 8:45 AM

    Hello Anon, a lot of the comments you hear from various officials are smoke screens. It is virtually guaranteed that behind the scenes right now the plans for global intervention are taking shape. The markets cannot wait for elections; the markets are in trouble now. The expected political affects during a Presidential Cycle and that type of thing can be thrown out the window in these epic economic times. The third year of the cycle should be the best and the markets barely finished in the green last year so those type of election-stimulus things are not applicable. They will come into play again in the years ahead but we are going thru a serious depression-like scenario now and markets are at the mercy of Europe.

    The global intervention with QE3, LTRO3, China stimulus (the only reason China said no stimulus is that they are probably coordinating the timing with the Fed, Japan and ECB right now and were asked to wait so the global intervention can supply a huge punch)is imminent, probably before or on 6/20/12.

    Watch for Japan currency intervention in the days ahead since when that occurs the coordinated stimulus is going to follow quickly behind.

    ReplyDelete
  3. AnonymousJune 5, 2012 at 9:50 AM

    You are super duper in your analysis! Always insightful and educational. I learned so much from you.

    ReplyDelete

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