Will It Break The Neckline?
The head and shoulders pattern is almost complete. The question remains, will it break the neckline? We have had quite the bout of selling since I posted the original picture, and a relief rally should come tomorrow, but it may be short-lived till we break below that lower neckline line.
I am now waiting patiently in cash to harvest another bottom in the indexes. We are now in oversold territory, and that is always my favourite place to shop! However, I still I need it to stabilize tomorrow to confirm and overturn my downtrend indicator that has kept me out of trouble since the turn of the year. Only then will I be looking to re-invest.
In other news the Swiss National Bank surprised the world by removing a previously held cap on its currency to stabilize their markets. I am not going to go into detail of why this was in place, but this news is focused on one possible reason:
That the Swiss bank is merely defending its currency against a likely European Central Bank move that will see a massive bond-buying program likely to devalue the euro further. So the speculation is that the Swiss move was a signal that the ECB’s quantitative easing program would exceed market expectations. The ECB get together next week in a closely watched meeting that could have a significant bearing on market sentiment.
One day all this cash floating around in the financial system will cause a crash, but I am going to cheer any moves towards easing as a crash is only another opportunity for me. The fact is, market likes nothing better than money printing. As when it is printed, there is only one place to put it and that is in the markets themselves. We should see All-Time Highs by February I believe.
Market News:
U.S. stocks fell for a fifth day on Thursday, with the S&P 500 finishing below 2,000 for the first time in a month, as crude prices fell, large U.S. banks reporting disappointing results, and Switzerland’s central bank unexpectedly gave up its minimum exchange rate.
Bank of America dropped after the bank reported a 14 percent fall in quarterly profit; Citigroup also declined as it posted a slim fourth-quarter profit. Target shares rose after the discount retailer should it would discontinue operations in Canada.
A measure of manufacturing in the New York region climbed to 9.95, above estimates. Other reports had wholesale prices falling 0.3 percent in December, and a larger-than-expected number filing for jobless benefits last week, up by 19,000 to 316,000.
Stock-index futures had fluctuated ahead of the open after the Swiss National Bank abandoned its three-year euro cap on the franc, with the move coming ahead of anticipated purchases of government bonds by the ECB.
U.S. oil futures rose as high as $51.27 a barrel, and then turned lower to end down $2.23, or 4.6 percent, at $46.25 a barrel on the New York Mercantile Exchange
Friday:
Earnings before the bell: Goldman Sachs Group
8:30 a.m.: CPI for December
9:15 a.m.: Capacity utilization for December
10 a.m.: Consumer sentiment, preliminary for January
News Sources: CNN Money & CNBC