Birchtree
TSP Talk Royalty
- Reaction score
- 143
Re: Birchtree's account talk
The longer the Fed doesn't raise rates here, and the yields on the 2 year note continue to move higher and remains normalized, any excess liquidity from this same spread will eventually have to find its way into equities. Because the yield curve is now righted this acts like a pump and all the liquidity building since early May has yet to hit the market. This tsunami building liquidity is the reason why the market can't build a trend to the downside. This liquidity level is fighting off any kind of real decline in which a trend can develope to the downside. All the ingredients are here for a repeat of 2003. If we fail here the downside risk is highly limited especially with the composite NYSE breadth MCSUM close to +400 - just waiting on +500 to signal escape velocity. If we rally from here, how many are going to watch from the sidelines in fear of going in at the top. The best decisions I've made over the years are the ones that I never made. The most important thing right now is that the A/D line holds above support of its EMAs, which it's doing quite nicely.
In the past, 90% up days, combined with one days gains in excess of 3% (as occurred earlier this year) have signaled a long term (not a medium term) rally. The number of NYSE stocks making 52-week highs has been expanding, confirming the May recovery highs. Common stock breadth is broadly positive and confirmed the May rally highs. More than 80% of the S&P 500 componrnts have gained ground since March. Leadership (transportation, energy, materials) confirmed by hitting all=time highs. In addition in both the DJ Industrials and the DJ Transports signaled a Dow Theory bull market, suggesting that the primary trend is up. I continue to be right and sit tight - there is an explosion on the way.
The longer the Fed doesn't raise rates here, and the yields on the 2 year note continue to move higher and remains normalized, any excess liquidity from this same spread will eventually have to find its way into equities. Because the yield curve is now righted this acts like a pump and all the liquidity building since early May has yet to hit the market. This tsunami building liquidity is the reason why the market can't build a trend to the downside. This liquidity level is fighting off any kind of real decline in which a trend can develope to the downside. All the ingredients are here for a repeat of 2003. If we fail here the downside risk is highly limited especially with the composite NYSE breadth MCSUM close to +400 - just waiting on +500 to signal escape velocity. If we rally from here, how many are going to watch from the sidelines in fear of going in at the top. The best decisions I've made over the years are the ones that I never made. The most important thing right now is that the A/D line holds above support of its EMAs, which it's doing quite nicely.
In the past, 90% up days, combined with one days gains in excess of 3% (as occurred earlier this year) have signaled a long term (not a medium term) rally. The number of NYSE stocks making 52-week highs has been expanding, confirming the May recovery highs. Common stock breadth is broadly positive and confirmed the May rally highs. More than 80% of the S&P 500 componrnts have gained ground since March. Leadership (transportation, energy, materials) confirmed by hitting all=time highs. In addition in both the DJ Industrials and the DJ Transports signaled a Dow Theory bull market, suggesting that the primary trend is up. I continue to be right and sit tight - there is an explosion on the way.