Stock Market Technical Analysis
click on image to enlarge
There has been misinformation coming out of the franchise news sites over the past few weeks that the reason the stock market reversed back upward after the farewell to QE speech six weeks ago and has been climbing to ever increasing heights since, has been greatly attributed to investors believing that QE wasn't necessary and that the market can climb with out it now having gone up 200+ S&P points in six weeks. This all sounds good but the facts of public record show a different picture.
The chart above shows the size of the Fed's balance sheet in trillions of dollars with its once a week numbers posted above corresponding weekly bars of the S&P 500.
- 9/10 - the S&P starts showing signs of faltering, looking like it was about to roll over
- 9/17 - the Fed injects 28 billion to see if it can stop the sell off from beginning
- 9/24 to 10/13 - S&P suffers a staggering sell down
- 10/15 - the Fed injects another massive sum of 19 billion to start a global short squeeze
- 10/15 to 11/19 - Fed's bond buying / liquidity injections continue as normal even though it has been officially turned off with the Fed's balance sheet increasing a massive 37 billion in the past six weeks
As long as the Fed continues injecting liquidity into the market, the S&P will likely continue to become even more overextended. When will the market run end? Very likely, the first week the liquidity injections show a zero for the week or an actual reduction in the Fed's balance sheet for the week.
Trade well my friends
Alan
