state of the global financial market oct 23 2014

Reading Global Financial MarketOctober 23 2014

Deepak SinghTwitter id: @smarket

Charts don’t Lie

Let us look at different Charts

Charts may not always be able to predict where the market is going next, but they always reveal the truth with regards to where it's at the present time (Pictures do not lie!).

S&P 500: Sharp Fall but then sharp recovery

The sharp recovery has erased all the short term fears

S&P500 has a base at 50 week moving average

Now 50 week ma and 1810-1820 is the new base for the market

THE WEEKLY CHART

A Long Legged Candle on Weekly Chart = Bullish

The way S&P recovered on weekly chart was a

very strong Bullish HINT

THE WEEKLY CHART

Now, There is Nothing to Fear Well, Nobody can say that

Let us look at CBoE VIX, Fear Index

Fear Index broke out above 200 week ma after 2.5 years - HUUGE

Is Breakout in Fear for real?

Post breakout, VIX index has pulled back. On weekly basis, will it close above 200 week ma of 17.52. Watch where VIX closes on Friday.

If YES, then Fear will be back with huge intensity…..

What about USD Index?

Are we looking at end of QE by end of October…

FOMC Meeting Two-day meeting, October 28-29, 2014 

The Fed will most likely end its bond-buying program (also known as quantitative easing, or QE3) as scheduled at the Oct. 28 to Oct. 29 meeting

What about USD Index?

End of QE = More $$$ index strength

New World Order of Strong USDCurrency is the stock of nation. A

relatively strong US economy means Strong $$$.

Breakout > 89 will be HUUGE

Strong $$$ = Bad News for dollar denominated Assets

Commodities are in free fall mode. Strong $$$ and slow down in China destroying pricing power of producers

Have you looked at Brent Crude decline?

The Charts were all setup back in

June 2014

Brent Crude Chart = The real decline

What does this decline mean for US economy?

Consumption Stimulus

The decrease in fuel prices will free up as much as $60 billion over the next year that the consumer can spend on other goods and services

A Good Stimulus

Real Economic Growth this Festive

Consumers will spend this Holiday

Consider that the National Retail Federation has just predicted a 4.1% increase in holiday spending this year.

Well, this is much above the 2.9% average rate for holiday-spending growth in the past 10 years

Now the worry… EUROPE

Nothing seems to be working

Source: US

Euro decline

An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights

What are they going to be excited about NEXT?

Thank You

• Disclaimer - The state of the market presentation is Deepak's perspective on the market. The presentation is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this presentation you agree to make no trade relying in whole or in part on the comments of the writers

• Chart Source: Chartalert.com

• If you have any question about the presentation: send me an email at 2deepaksingh@gmail.com

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• Twitter id: @smarket