Sunday, October 13, 2019

Say Hello To QE For Ever :)

SGS  Market Timer Status:  NEUTRAL 
NEUTRAL as of the close of Friday Oct 4, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

It seems that Friday's big rally was not because of what was announced in regard to US / China trade negotiation but the rally was due to the announcement by the Federal Reserve in regard to REPO.  In short, starting this week the Fed is to expand its balance sheet and buy $60 billion of US T-bills every month for at least the next nine months.

It's hard to understand why the New York Fed has to intervene in REPO and buy the collateral (all short-term US T bills) put forth by a temporarily distressed bank so that bank can borrow money overnight at the Fed funds rate. Why other banks are refusing to lend money to that bank?  Is it because that bank is about to go under? Is that big bank Deutsche Bank? Does that have anything to do with the Deutsche Bank money laundering for its Russian clients? Is Trump organization involved with any of this? Is all of this going to come out once the Congress gets Trump tax returns? Am I watching too many episodes of Conspiracy Today with Bill Flatearth? :)

SGS declined last week but still remained NEUTRAL.

Support and resistance levels for SPX for this week are shown above.  

My Plan

It seems to me for whatever reason the Fed has decided to pump money, albeit indirectly as they did with previous QE's, into equity markets. If that's indeed the case, then indices would rise so long as the Fed continues expanding its balance sheet.  If the rally that started last Wednesday continues this week, then regardless of what the Fed calls its new expansion, it is just another QE similar to previous three QE's.

Last week per my plan I opened my first two positions in SPXU.  That was a mistake because SGS had not gone SHORT.  I got in front of the market, and when you are in front of the market, you are exposing your behind.  I think there is a good chance SPX sells off early Monday to test its ASL.  My plan is to close my positions as SPX test its ASL around 2945 or if SPX takes out its Friday's HOD around 2993.

SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.