Keystone's BPSPX Daily Chart Indicator
This is one of Keystone's market indicators regularly updated on the Other Market Signals page. When the BPSPX bottoms, or peaks, and a six percentage-point reversal occurs, a market buy signal, or sell signal, respectively, occurs. After the November bottom, the BPSPX reverses from 58 to 64 which signals the all-clear for bull upside. The BPSPX has been topping out for over two months; the top is at 84.40. Thus, 84.40 - 6 = 78.40. Therefore, the bears need to see a 78.40 number or lower and a broad market sell signal will occur verifying serious market trouble ahead. Place this on your watch list for the new week ahead. If the market bulls can keep the BPSPX above 78.40, the happy market upside will party on. If the market bears push the BPSPX under 78.40, it will be time for the bulls to receive extended punishment moving forward. 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.
Given the level of QE support, is it really possible for the market to go down? I expected a sell off at the start of March, but the market has been remarkably resilient.
ReplyDeleteI dont think the market ever go down, I mean free fall... the ECB said that it will remain accommodative, Europe yields are stable, China improving, no major problems globally, the psychology is that investors ignore all but only see $$$ dollar signs on their eyes from Fed, they are happy and satisfy, market will grind up slowly day by day.
ReplyDeleteYep, the Fed's money bazooka is powerful but the history over the last few years shows the ebb and flow. Bring up a weekly chart from 2009 to now; the QE1 pump ended in the spring 2010 top, the QE2 pump ended in the spring 2011 top, the ECB's LTRO 1 and 2 and the Fed's Operation Twist ended in the spring 2012 top, the ECB's OMT Program and QE3 Infinity ended in the September 2012 top, and now the Fed's QE4 Infinity and Beyond (the replacement program for Operation Twist) results in a top at ?
ReplyDeleteThe pattern of spring tops has occurred in 2010, 2011 and 2012 so see if that trend continues for this year. But the prior four global QE interventions all ended in selloffs, so will QE4, it is simply when. The interesting aspect is that the Fed's programs are running out of steam having less and less of an impact as time moves along. In addition, Chairman Bernanke would wait for deflation before instituting QE1, QE2 and Operation Twist but that play book was thrown out the window as the Fed throws the kitchen sink at the markets since last summer. Interestingly, the U.S. just dropped into deflation despite all the money pumping.
So can the markets continue higher? Sure they can but the time for a pull back is needed. It may have occurred for the late February selloff but the money fleeing Europe has a lot to do with the latest push higher in the markets that gave the SPX its new all-time closing high. The move in utilities, dividend stocks and other perceived safe haven plays is obscene. Each QE results in adding air underneath the markets since the buoyed markets are pumped by the sugar high, not fundamentals. The big question is how much air was placed underneath for each QE that occurred over the last few years? No one knows that is what makes things interesting. So a major crash cannot be taken off the table.
The key is the words from the Fed. Bernanke is fully aware of the market damage he is performing but he is between a rock and a hard place now, he has to simply keep pumping, he is boxed into a corner. Since the politicians have hidden under the desk for the last few years, and only surface to cause damage, such as the Administration increasing taxes and the Obamacare program which is killing business, the Fed feels obligated to try to do something. And that is the problem, the politico's in general do more damage than help. Short term sugar highs only lead to worse long term outcomes.
So Bernanke will probably hint at language to taper the purchases down, the lieutenants were out last week hinting this. The minute he coughs and it sounds like the word 'taper' the markets will sell off in force.
The sad outcome that is a strong possibility is world war. If WW III or some other major conflict breaks out, everyone's life will instantly change, and the markets will of course pull back, but the war will be blamed for ruining the market rally. This is what happened for 9-11. The economy was already sick, the markets were starting to stumble, then 9-11 occurred, so it was touted as the blame for hurting the markets which is not true. A similar outcome is probably in store in the future. The charts say this is a top and down is the direction. Time will tell.