- Everything is meaningless -- until the Fed announcement at 2:15 p.m. Productivity drop gives a negative spin to the day.
- The S&P 500, Nasdaq 100, high-yield corporate debt, gold, euro/dollar and emerging markets all move to bear phase on Person's Proprietary Signal (pps) (SPY, QQQQ, JNK, GLD, EUR/USD, EEM).
- Fear index moves to pps bull phase (VIX).
- Crude oil's pps bear phase confirmed by the parabolic sar (USO).
- Dollar/yen crosses from oversold to neutrality, a bull signal (USD/JPY).
Think of today as macro-economics day. A lower than expected productivity report this morning spooked the stock indexes toward bearishness, and the dollar toward strength. Meanwhile, the Federal Open Market Committee is meeting, and its announcement at 2:15 p.m. Eastern has to power to toss all prior assumptions into the shredder.
I think the reasoning at this hour goes like this: Lower productivity means less chance of a strengthening recovery, which will force the Fed to keep rates low and move in with other stimulus measures.
Although this should, in theory, argue for a weakened dollar, the U.S. currency is in fact strengthening against crude oil, the euro and the yen, suggesting that fear of continued economic stagnation in the United States will be even worse for the rest of the World. Emerging markets, which are extremely sensitive to the U.S. economy, are showing the effects of all of this speculative talk.
Bottom line: We're in a pickle. Below, oil and gold, and global indicators.
Oil and Gold
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.
Indicator Exchange-Traded Fund Symbols: EEM - emerging markets EUR/USD - euro/dollar currency pair GLD - gold JNK - high-yield corporate bonds QQQQ - Nasdaq 100 index SPY - S&P 500 index TLT - Treasury long-term bonds USD/JPY - dollar/yen currency pair USO - crude oil VIX - fear index Abbreviations:
- psar - Parabolic Stop and Reverse
- adx - Average Directional Index
- pps - Person's Proprietary Signal.
- ma20 - 20-day moving average
- macd - Moving Average Convergence-Divergence
- sto - Fast Stochastic
- trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
- adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
- psar, pps, macd: green for bull mode, red for bear
- sto: green for overbought, red for oversold, yellow for the neutral zone.