john 18:10 potentially an astute observation with potentially very rewarding or very painful consequences.
I had an offline conversation with a trader colleague exactly about that and in reference to my S&P chart with 300 point potential that I have posted on the forum maybe 2x already.
Essentially the preponderance of odds rests with stocks going up further if only on the $80 billion/month juice being currently officially provided by the Japanese printer. The printing can be considered, and probably is, a formidable negating force to my chart trendlines-inspired 300 point pullback.
On the other hand, 2 factors that could be posi-force are:
1) 300 points off 2040 is only an 8.5% pullback - a healthy tiny cleansing fire.
2) S&P is yielding a 1.89% dividend, with all the risks associated with holding stocks. Compared to the current 10-yr note yield of 2.318% - very noteworthy 22.5% superior yield.
I look at this situation as a perfect illustration of the nefariousness of Central Bank activist meddling in the market which hinders fair free market valuation and pricediscovery and causes massive mispricing and mis-allocation.
Noone can dispute the power that printer CBanks have in the market. But no one can also dispute that some/one/thing is bigger than the market. Activist CBanks are playing with fire. One day they will cause the market go "woosh-wamp" like a bottle of exploding oxygen. Then my 8.5% 300 point pullback will look tame. Even compared to a 25% dump that would see 1530 price level.
There is a 3rd point, albeit it is one whose timing is impossible to predict: the moment when folks stop trusting one of the CB's money.
GVI Forex john 18:10:44 GMT - 11/15/2014
Note "perfect" (.99) correlation between JPY and Nikkei and near perfect (.96) relationship with S&P.
GVI Forex john 18:00:13 GMT - 11/15/2014
We continue to build out this table. NZD items have now been included. Bottom line, its all about equities and U.S. interest rates.
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