Fed Disappoints according to David Paul
The technical situation in the market accurately predicted the Feds action last night. In this the Fed has tried successfully pulled down the cost of long term borrowing in the US by swopping short term bonds for long term bonds.
Rates of short term bonds are a function of policy where longer term rated are decided by the market. Yields of long dated bonds have tumbled in anticipation of the Feds action.
Last night I presented a long talk in Cape Town about the price and volume relationships is blue chip SA shares. All apart from Exxaro show prices rallying on falling volume which is bearish signal. Certainly the Fed could have changed that but decided not to. There is a strong possibility of a selloff in stocks down to the old lows of a few weeks ago and below. A level of 9500 on the Dow is possible on this move. As I write the Dow is in freefall at 10964 in overnight US trade.
There was a flight from risk and a move back into the Dollar. The Rand has capitulated to above 8. Gold is slightly softer but I am happy with my long term bullish forecast of 2000$. With any luck my Gold shares will have a great day.
Forecasting is a difficult business but the material taught by Mr WD Gann helps. Using his material and about 25 years of study I forecast a turning point coming in last Saturday. The market made its highest tick on Monday morning before this 500 point fall to date. For a while recently I thought the last week in September would be the low. I was incorrect and it’s turned out to be a high. The last Gann date was on the 23rd of July which also marked a high prior to the wave 3 collapse. The turning point on Monday looks very likely to be the start of a wave 5 collapse.
The next Gann turning point can very well be the low. I will try and get the time to compute that date for you over the weekend.
After this selloff we should have a sustained rally. We need to be patient on the long side of the market until then.
David Paul
Canal Walk