Wednesday, June 10, 2009

Revised range estimate

Here is a 30 minute bar chart of e-mini day session trading for the past 10 days or so. I had to dump my long position when the market dropped below the 936 level on relatively high volume.

You can see that today's volume is not unusual compared with the other days' volume shown on this chart. This makes me think that the market is still going to be contained within the trading range outlined by the green dashed line. I now estimate that today's range will be 925-950 (blue rectangle).

The break below the 936 level coincided with the auction of the 10 year notes today. There will be a thirty year bond auction at the same time tomorrow. Evidently market players are using rising interest rates as an excuse to sell. As I explained in this post, I think this reasoning is faulty. Consequently I think the results of these auctions have bullish implications looking out more than a few days.


Kishore said...

Carl, I read your analysis of the bond market again, and again.

But is it not true that printing of currency by the FED is equivalent to monetizing the already humongous debt? Will that not, eventually, crash the dollar and no market for bonds to allow the government to increase the debt any further.

In other words, debt cannot be increased forever and it cannot continue to benefit the economy.

The assets may be worth more as measured by a worthless dollar. The days of million dollar currency notes, like the million Lira notes, may be approaching. That's what Jim Rogers said a short while ago and I hope he turns out to be wrong.

The FED should be disbanded and US govt should stop printing because debt cannot be wiped out other than by spending less than income.

Of course, foreign debts can be wiped out by wars!

janet said...

The US is I believe the largest(country) holder of gold, that should come in handy in a financial pinch...LOL (especially with gold prices expected to soar)