- Bernanke's Jackson Hole speech roils the market, and then they unroil, sort of.
- Treasury long-term bonds drop sharply as the speech is released (TLT).
- The fear index drops sharply (VIX). No fear here!
- High-yield corporate debt slips back into fast stochastic bull phase (JNK).
- Dollar shows a macd bull signal against the yen, but it's so slight as to be untrustworthy (USD/JPY).
- Emerging markets show early bull signs (EEM).
Stocks and Rates
It always happens. An event due to happen. CNBC gets excited. The events happens. The markets go crazy for 15 minutes. And then, things quieten about where they were before. Nothing really happened.
TLT is trading more than 1.5% below Thursday's close. Falling Treasury bonds mean traders expect higher yields going forward. Benanke said he would step up efforts to revive the economy -- read the NYTimes report -- which means higher interest rates, and so lower bond prices make sense.
The VIX is trading more than 3% below Thursday's close. No one expects the markets to jump up and shout hallelujah as the Fed stimulates the economy, but equities are less likely to show volatility along with a collapsing economy. Higher VIX, make sense.
JNK moved to bull phase on the fast stochasistic, having been in bear territory on the technicals since Aug. 6. Fed stimulus of the economy means healthier companies less likely to default on their junk bonds. Higher prices for high-yield corproate debt? Makes sense.
Rational markets. You betcha!
Below, oil and gold, and global indicators.
Oil and Gold
The USD/JPY macd moved into bull territory by a few thousandths of a point, and so the averages that lie behind the macd could reverse the indicator back into bear territory very easily.
The EEM bull phase shows conviction as the fast stochastic moves above the 20-line at a steep angle, buttressed by a rise in the macd toward the zero line.
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
- 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
About the glance: The colors indicate the state of each signal.
- 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.