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March 25, 2013

Banking System 101 – Part 2

This is the second part in an ongoing series designed to guide you toward a basic understanding of Federal Reserve and ECB monetary policy as conducted in recent history, as well as what exactly constitutes and drives quantitative easing. Despite being on the forefront of the mainstream media since 2007 you will rarely run into anyone who has a thorough understanding of how all the pieces fit together. We are completing our basic introduction and then will explore a chronological recap of what has transpired in the past few years. If you missed part one then please make sure you read it first before continuing below.

MONEY SUPPLY AND THE MONEY MULTIPLIER

Recall our [...]

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March 19, 2013

Banking System 101 – Part 1

This is the first part in an ongoing series designed to guide you toward a basic understanding of Federal Reserve and ECB monetary policy as conducted in recent history, as well as what exactly constitutes and drives quantitative easing. Despite being on the forefront of the mainstream media since 2007 you will rarely run into anyone who has a thorough understanding of how all the pieces fit together. We will start with a basic introduction and  then explore a chronological recap of what has transpired in the past few years.

Fed Monetary Policy and Quantitative Easing

Before the 2008 crisis, conventional monetary policy in the US boiled down to the Federal Reserve (the [...]

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March 5, 2013

The Sky Is The Limit

As I’m typing this the SPX is a bit over 33 handles away from its all time high of 1576.09. Whereas just yesterday we were stuck near an inflection point which the bears could have exploited to their advantage the landscape has changed quite a bit since early this morning:

After the limbo comes the rocket. As of right now I don’t see any technical hurdles that would prevent us from continuing toward our P&F target of SPX 1615.

As a matter of fact today it triggered a triple top breakout – that’s just two days after a bear trap warning when the ES was stuck near that diagonal resistance line. The bears had a real good shot [...]

 
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March 1, 2013

Congestion

If you look at the tape of the last week we’re seeing fast moves in both directions. Unless you enjoyed the advance warnings courtesy of yours truly then odds have it you were at minimum rattled a few times or perhaps even lost some coin in the fog of all that emotional turmoil. I think we’ve done exceptionally well throughout those gyrations and for that we should be thankful.

Looking forward we are now approaching a make or break point on the equities side. The reason for that is that congestion periods mixed with high volatility in volatility (see wild swings on the VIX) are opportunities to force the completion of a trend. We had fast moves on both sides, as [...]

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Cognitive Bias Carousel
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    Something very interesting happened during our trip back to Valencia last Sunday. After checking our luggage and passing through the airport’s security procedures we had a … more
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