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The Federal Reserve Bank pulled off two separate POMO(permanant open market operations) operations today for a total purchase of $13 - $18 billion worth of U.S. Treasuries. This action by the central bank has helped to inflate the stock markets higher since it was announced by the Federal Reserve Bank Chairman Ben Bernanke on August 27th, 2010. It is rather obvious that the central bank wants to keep the mood very jolly into the Christmas holiday which is on December 25th, 2010. The Fed also has a double POMO operation scheduled for tomorrow. This has been the first time that the Fed has orchestrated back to back double POMO injection days since QE-2 began.
In order for the Federal Reserve Bank's quantitative easing program to work for a while it will require the U.S. consumer to spend money. At this time U.S. consumer spending accounts for 70.0 percent of the gross domestic product(GDP) in the United States. Without the American consumer spending money this inflation rally will be a complete failure. Deflation happens for a reason and it is a real warning that something is fundamentally flawed with the current system. However, instead of letting supply and demand dictate where and how the markets will trade, the central banks artificially inflate the markets with low interest rates and the purchasing of Treasury bonds. This causes inflation and a wealth effect. The logic behind this method is once people feel better because they see their 401K's and retirement plans going up they will begin to spend more money and income. The Keynesian system that has been in place for so long can continue to function as it has for so many years.
The one problem with this theory is that every other central bank that has tried this method has been ultimately unsuccessful. Japan has been battling deflation since the late 1980's. In 1989, the Nikkei Index traded near the 40,000 level. Today the Japanese stock market index trades around the 10,000 level. This is nearly two decades of sideways to lower action in the second largest economy. What has saved the Japanese people has been the high savings rate and the low debt load by the Japanese citizens. This is just the opposite of the U.S. consumer who is still loaded with debt and has a very low savings rate. Enjoy the inflation rally while it lasts. Unfortunately nothing lasts forever.
The key to the M-A pattern is to see the formation and recognize what makes it in play and what negates it. This M-A pattern played out for the prime reason that key rules were never broken. We will unveil this to you all so in the future you may profit off this pattern. The M-A pattern is a classic bearish pattern that signals downside. Knowing this would have told you that the markets were going to fall today. The first key comes in the form of the right side of the M pattern. Note how the left high of the M was at $110.13 on the SPY. Then please take note that the right side of the M pattern was at $110.34. The first rule to an M-A pattern is that the right side of the M should be higher than the left. This clearly is the case and tells any market technician that this could be an M-A pattern in play. Next, please note that as the rally happens and the upswing of the A forms, the high of that A cannot take out the right or left side of the M pattern. In addition, note that the upswing of the A never takes out the big red down candle on the 60 minute candle. Therefore, that entire upswing is considered inside candles do the big red down candle. This means that it is still categorized as an in spirit of bear flag. Because all these keys were in place, this M-A pattern had a high probability of working out. Sure enough, as the master level was hit, the A pattern drop occurred and the market sold hard. Learn these patterns, make the money!
#1. Note the right side of the M is higher than the left.
Ordinary Bangladeshis have been tempted into the stock market by higher returns than banks.
Hundreds of angry investors have staged protests in the Bangladeshi capital, Dhaka, after the stock exchange saw its steepest ever fall in a day.
Reports said they threw bricks at police, marched in the streets shouting slogans, and staged a sit-down protest.
Shares in the stock exchange suffered large falls within hours of opening on Sunday as panicked investors went on a selling spree.
The index ended the day down by 552 points or 6.72%.
It has been on a rollercoaster ride in recent weeks, hitting a record high on 5 December, having climbed 80% since the start of the year.
But on 8 December it nosedived, prompting protests in Dhaka and towns elsewhere.
On Sunday, at least 500 investors hurled bricks at law enforcement officers near the Dhaka Stock Exchange and the Securities and Exchange Commission (SEC) offices, said local police chief Tofazzal Hossain according to AFP news agency.
"They chanted slogans against the government and the regulators, and marched through the busy roads in the Motijheel Commercial area, halting traffic. They also staged a sit-in at the SEC building," he said.
Analysts say Sunday's index fall was triggered by a central bank interest-rate hike.
The regulators have also taken measures in recent weeks to restrict money supply into the share market after concerns that stocks were overvalued.
The move forced big institutional investors to withdraw from the market, triggering panic among individual investors.
The rising value of the stocks in recent years has attracted hundreds of thousands of small-scale or retail investors in Bangladesh, says the BBC's Anbarasan Ethirajan in Dhaka.It became a popular investment for ordinary people, often providing higher returns than bank deposits and savings.Regulators have now agreed to relax some of the conditions, hoping that will increase the money supply and stabilise the market, he says.
Article:http://www.cnbc.com/id/40716007
Video:http://www.cnbc.com/id/15840232/?video=1700648914&play=1
The book reflects Steenbarger’s extensive background in mental coaching, trading, psychology, and teaching. He has authored two other books on trading psychology, he coaches hedge fund traders, he is an associate professor at SUNY-Syracuse and he holds a Ph.D. in clinical psychology, all excellent credentials for the author of a book that goes down this heady path.
