Proof - “Deflation” is taking place at the Fed!
In your opinion, does the Fed prefer “Inflation or Deflation?” The picture above proves that Deflation is taking place at the Fed.
On a more serious note regarding the Inflation/Deflation theme, many feel the Fed’s policies will lead to strong inflation. From a stock market persective, inflation is taking place, as the Dow and S&P 500 are at/near all-time highs.
Another asset class can’t say the same thing…see chart below
The Thompson Reuters Commodity Index a few months ago broke below a 13-year support line (left chart), then rallied to kiss old support as resistance and has fallen hard since.
On a shorter term basis (right chart) the index could be breaking support of this bearish descending triangle pattern. ”Measured move” of this bearish descending triangle suggest much lower prices.
I suspect that the Fed would rather fight excess inflation over deflation. In reality, none of has much control over inflation/deflation, other than we can make adjustments to our portfolios.
A further breakdown of support in the right chart would suggest that lower prices in commodities will be the trend. Understanding this trend could be important as Gold & Silver could be breaking 13-year support and Crude Oil is testing a 5-year support line.
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Russell 2000 - Bulls and Bears favorite way of looking at small caps.
Year-to-date, the Russell 2000 has lagged the S&P 500 by almost 8%, a fairly wide divergence. This divergence has a few investors concerned that this is a sign of weakness to come in the broad markets.
The above chart takes a technical perspective of how the bulls & bears could be looking at small caps.
Bears like this - Back in early March the Russell 2000 came upon a 14-year resistance line. Since then the Russell is down 3%, while the S&P is up almost 8%.
Bulls like this- 6 weeks ago small caps hit a rising 5-year support line and have moved higher since, moving in sync with the broad market.
As you can see these two support/resistance lines have seemed to impact small caps over the past few months, as they have mostly chopped back and forth between these lines.
Bottom line- Small caps are in a tight technical jam that looks like it will end soon. Whether you are bullish or bearish small caps, it should pay to follow the breakout/breakdown.
Original posting at Seeitmarkets.com
Gold Bugs index is about to break from this pattern
The Gold Bugs index remains above support that dates back 10-years.
Over the past year and a half, the index has created a pennant pattern, a series of lower highs and high lows, teasing both the bulls and bears. As you can see, this pattern will be coming to an end soon.
Pennant patterns are popular for suggesting that a large move is ahead, yet which direction is a different story. This pattern does fall under the continuation of trend category, anything is possible though!
After years of disappointment, bullish miner investors should be treated to some fun upside-action if the pattern breaks out to the upside. The best plan for a pennant most often is to set back and watch for the breakout and then follow it.
This pattern would appear investors won’t have to wait long for the outcome.
Will Alibaba push Yahoo past this 10-year resistance zone?
For the past decade this 38% Fibonacci level has been very heavy resistance for Yahoo, stopping it upwards progress two different times.
Could the third time be different with the assistance of Alibaba?
Sentiment towards Yahoo by Stocktwits viewers currently stands at 97% bulls. Over the past few months these investors have been spot on with this trade.
A breakout of this resistance line, would have to be viewed as a very bullish event.
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