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Originally posted by fromunclexcommunicate
Bernanke talked about the central bank having toolkits to unwind monetary stimulus. The tools obviously work better when investors don't know how and when they will be used. The treasury auction next week is estimated to be a record $ 113 billion in bonds. Yields were up some today as they should be with all the debt that is going to need to be purchased. Selling bonds that just barely beat inflation could be tough when stocks are jumping 14% in value in just 1 week.
[edit on 22-7-2009 by fromunclexcommunicate]
Originally posted by fromunclexcommunicate
reply to post by RetinoidReceptor
I read GBM's post about this not being a double top a couple times. He knows his stuff technically. *technically* the peaks of a double top need to be spaced at least a month apart and the second top simply remains a resistance level till we break below the low between the peaks by over 3%. Interesting.
Originally posted by Hastobemoretolife
I wonder if the market is going to decline next week when the bonds go up for auction?
Originally posted by Hastobemoretolife
reply to post by RetinoidReceptor
I think what is going to happen is it will go up to maybe 10,000 or 10,500 and then it will crash again. Then rinse and repeat just when it crashes it will drop to maybe 6000 or 5500 then depending on the environment and what kind of regulatory reforms they push through we should see a steady but slow rise up then no crash. That is my theory at least.
I wouldn't buy or short right now just for the fact that as you said it is near the top.
Originally posted by fromunclexcommunicate
Corporate and individual tax revenues tend to be low in the third quarter especially this year with unemployment running so high. The Fed is expected to auction off up to $2 trillion in debt through September to help cover the deficit.
Since that is triple last years debt sales it may change the supply demand picture for bond sales. The Japanese have stated that they would be willing to buy US bonds if the yields become more attractive which seems the logical outcome. The stock markets are over bought again, so if they continue to move up until the Fed formally starts raising interest rates through announced overnight lending rate increases we could see a crash. Given the recession outlook, with the probability of higher interest rates looming, a fairly flat trading range for the stock markets would be my estimate through the fall.