You might be wondering who Rosengren is, but apparently he’s pretty important—that’s Boston Fed President Eric Rosengren I’m talking about. He single-handedly knocked the market out of the box on Friday when he said, “Futures markets are wrong, and the Fed likely should hike rates sooner than implied.”
Is the Fed really getting predictable or am I just getting cynical? Its probably a little of both. It was about a dozen years ago when my wife really started worrying about me. Remember back in the day when CNBC used to show that little clip of the Fed Chair Alan Greenspan walking to his office and they always tuned into his briefcase?
Once again Fed Chair Janet Yellen did her best Alan Greenspan imitation and wouldn’t commit to anything while Vice Chairman Stanley Fischer sounded like he wanted to be sure the stock market doesn’t become too euphoric. The crowd interpreted all this the way they will, but for me nothing has changed. It’s still a case of “good cop, bad cop” and they are leaving all their options on the table.
Want to see something fantastic? If you got this one you had the key to Thursday. This square out symmetry hit very early Thursday morning on the crude oil chart. After all these years, I figured out exactly what this is. What I can tell you is financial markets have overcome a lot of intermediate level time windows to this point, the last of which is 721 weeks up from the 2002 bottom.
Another week, another terror attack. After rising on Thursday, the VIX dropped back again on Friday. Last week I told you the market behaves like a little kid who won’t take all of the news to heart until it becomes personal. The key point here is for everyone to realize what eventually happens when society comes under attack--the stock market comes unglued. Want more proof? Let’s go back 100 years.
Another week, more mayhem in the world. What else is new? Last time I showed you the chart of the late 60s. The more I look at this situation, the more I think these times are more treacherous than 50 years ago.
Last week I showed you the incredible square out on the DAX for the Brexit high. Late Monday many charts formed a new square out low, which propelled markets back up. Probably the best example I have for you is the S&P 500, which turned back up at the 1991 handle in 91 hours for the move.
While the UK and the rest of the world was trying to figure out who really won the vote on Thursday night, I can tell you beyond a shadow of a doubt the real winner was WD Gann. Oh yeah, I wouldn’t kid you about something like this.
Wednesday became a day that sold on the announcement but settled in flat as I think traders weren’t so concerned as to what the Fed might do as much as they were looking for some bravado after the recent comments they’d raise rates soon.
Two gigantic weeks are coming up. Up to bat first is Washington and Fed Chair Janet Yellen. The Fed knows it’s an absolute absurdity to raise rates in an economy that just created 38,000 jobs. But do you want to tell me they have their collective heads in the sand about an economy barely staying above water at 0.8% GDP?