Saturday, December 28, 2019

Fed's New QE Is Massive

SGS  Market Timer Status:  LONG 
LONG as of the close of Friday Oct 25, 2019
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

SGS-ST Market Timer Status:  Neutral 
Neutral as of 1 PM Tuesday Dec 24, 2019
SGS-ST is a Short-Term (hours to days) Timer

Since last October the Fed has been injecting about $120 billions of dollars per month into the banking REPO.  Per direction from the Fed, Fed agents continue to buy short-term US treasuries bills in order to keep short-term rates from exploding higher.  I don't know what is going on but there are important questions that need to be answered soon:
  • Why intervention at such a high rate is needed? Maybe it's because that the deficit spending is becoming  so massive that there is not enough private demand for the short-term US government debt. 
  • How long can the Fed continue injecting money into REPO? $120 billions per month is not sustainable.
  • What happens when the Fed stops? The Fed plans to stop its intervention in REPO sometime in 2020-Q2.
I have no answer to those questions but so long as the Fed continues to inject more money into the financial system via its new QE, indices grind higher and higher.  BTFD.

SGS advanced this week, confirming new all-time highs for major indices.  SGS closed on Friday near 500 which signals that, short-term, indices are overbought.

Support and resistance levels for SPX for the coming week are shown above.  SPX is overbought and there is a good chance of a sell-off to test supports sometime this week.

My Plan

Last Tuesday SGS-ST changed its status from Long to Neutral. I'm in cash and waiting to see which way SGS-ST turns.

Season's Greetings & Happy New Year

Current Long-Term Portfolio
Past Long-Term Portfolios


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.