This Week in the Markets Feb 1 - 5, 2016
While there might not have been a lot to post about last week as far as trades the markets have seemingly bottomed where I roughly called well ahead of time. That of course is oil and the Stocks indexes. However what to make of them from here?
One of the key areas to look at when you see how high the stock indexes have risen is the money creation that has gone with it in measurement of M2 in the US. It paralels the stock indexes uncannily over the past six or seven years. Way too much of a coincidence to say that the fed and the banks that fed was giving the money to are not responsible. They are.
Now in looking at the chart of M2 (you can google it) you will see that money is still contracting down so it might indicate that the market has a little further to fall unless the fed steps in again where buying the dips is again the thing to do.
While the manipulation of markets is nothing new in today's world I am not sure that there are any reasons why a major correction might now occur. I am not saying an all out crash but simply a major correction. In truth there is no reason. If the artificial stimulus is not going to happen then I suspect that the markets will fall. Maybe it will not work any more. I don't know. You can see that with the introduction of the QE stages from 1 to 3 that they seemed to have less and less of an effect on the markets.
I am still unsure about the rise of the Dollar and how far it will go but it may head to near the 105 area before falling off again.
Not at the moment unless risk goes completely off. I suspect that this will be the week that the NFP reports finally begin catching up with the bad data coming out from the higher Dollar and the small fed monetary interest rate raise. I suspect that the numbers will be less than stellar as the service sector begins to contract slightly.
So look for a choppy week with the currencies and the Dollar to move up a bit. The USD/YEN might be the currency to trade if the stock indexes continue to rise. If they do not but rather begin to fall again then the YEN will appreciate. The YEN policy last week may just have been introduced for the purpose of helping the stock indexes to move higher with the correlations so tight.
I am still looking to buy the dips in oil and I will see whatever else surfaces as the week progresses. Cheers!
One of the key areas to look at when you see how high the stock indexes have risen is the money creation that has gone with it in measurement of M2 in the US. It paralels the stock indexes uncannily over the past six or seven years. Way too much of a coincidence to say that the fed and the banks that fed was giving the money to are not responsible. They are.
Now in looking at the chart of M2 (you can google it) you will see that money is still contracting down so it might indicate that the market has a little further to fall unless the fed steps in again where buying the dips is again the thing to do.
While the manipulation of markets is nothing new in today's world I am not sure that there are any reasons why a major correction might now occur. I am not saying an all out crash but simply a major correction. In truth there is no reason. If the artificial stimulus is not going to happen then I suspect that the markets will fall. Maybe it will not work any more. I don't know. You can see that with the introduction of the QE stages from 1 to 3 that they seemed to have less and less of an effect on the markets.
I am still unsure about the rise of the Dollar and how far it will go but it may head to near the 105 area before falling off again.
Not at the moment unless risk goes completely off. I suspect that this will be the week that the NFP reports finally begin catching up with the bad data coming out from the higher Dollar and the small fed monetary interest rate raise. I suspect that the numbers will be less than stellar as the service sector begins to contract slightly.
So look for a choppy week with the currencies and the Dollar to move up a bit. The USD/YEN might be the currency to trade if the stock indexes continue to rise. If they do not but rather begin to fall again then the YEN will appreciate. The YEN policy last week may just have been introduced for the purpose of helping the stock indexes to move higher with the correlations so tight.
I am still looking to buy the dips in oil and I will see whatever else surfaces as the week progresses. Cheers!
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