S&P/ASX Small Ordinaries (ASX:XSO) - The Brains Trust - 2016, page-10835 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by paddington bear ↑

The major New York indices have found themselves in such an invidious position as we go into this Fed speech. Have they formed an ABC correction over the period since the beginning of July? If that is what these indices are doing, it is extraordinarily bullish. At the same time both the S&P and the NYA have virtually walked across my charts till they are right on a Gann line from June low. Just amazing – almost as though the market knows exactly where everything stands. And right in this period that I thought was so important for markets.

Looking at the nine groups that make up the New York market, it is encouraging that the sectors that investors usually run to when they are worried such as Health Care and Utilities, have not been performing as well as one might expect in this worrying period.

At the same time, I have mentioned for some time that there has been growing divergences across many indices. This is still the case and is an overall negative that the market would have to overcome to continue higher.

Now the question is – which way will it all break!

And then on the other side of the page, gold has had five down days – of course it can have more – but it is getting extended and silver, which has dragged gold down on its occasion, is close to its major support. At the same time, DUST which is the three times bear on gold, has had two massive days of volume – first rallying on high volume and then last night turning down on even higher volume. That looks negative which is a plus for gold.

The problem I have with both Wall Street and gold - can they move up together.....

Australia looked to be attempting to front run the outcome on Wall Street but my concern is that the XJO is being taken higher by a smaller and smaller number of leaders. Discussion above re MQG – I nearly spilt my coffee when I got to that chart this morning! Such a tight upslanting wedge.

And looking at my long term chart of our Gold Index, it didn’t exceed my big target of 5700 by very much and has been coming off ever since. Hard to see where it might stop but it has done a bit of work in this area in the past. Will just need to see some sort of turnaround that I am happy with to be sure that it has found an equilibrium point.

And then just to top off a morning I would rather not be updating my charts – I do not like what my iron ore chart did yesterday. I have mentioned before that it had rallied all the way up to the resistance area of 60/65. To start giving bearish signals here is not good.

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Brilliant post as usual PB.

I know i sound like a broken record but there really is one overriding force in the drivers seat at the moment. All of your questions above and much of the commentary all come back one thing. Rates....more specifically future pricing of.

Gold and equities can certainly both go up together as 2016 has proven. All on the back of bond yields/rate futures. This also means they can go down together if expectations change.

Your charts all coming to critical junctures. The market is waiting for the all clear....on rates.

Now in terms of risk reward, the market is still very much pricing in low rates for a very long time. In the last week both Dudley and Fischer have been publicly hawkish. Were they just speaking on behalf of themselves or are they trying to prepare the market for Yellen? Does anyone in such positions speak for themselves anymore or is it all orchestrated? I would certainly be favouring the latter.

If i was a betting man (which i am), I'm thinking Yellen will be short term hawkish (September), long term dovish in a (misguided) attempt to soften the blow to markets. In such a scenario we should see an initial spike down in gold and equities, followed by a strong recovery. A flattening of the yield curve and off on our merry way for your wave 5.

Unfortunately I think scenario this will just continue to set-up a train wreck. I'd love to see her prepare the market for September, maintain guidance for 2017, then follow through (in Sept), so we can have a decent correction and take some of the hot air out. That would set-up a far more sustainable, long term bullish scenario for all asset markets, albeit with some short term pain. That unfortunately, is far less likely that option 1.