Daily Archives: March 16, 2018

30-Day Fed Fund Rate Review

I believe that the 30-day fed fund rate will determine any potential rate increases to come, and that the rates should go flat again in the future. We had flat bottoms and flat tops each time before rates reversed. Any flat bottom which represents a rate freeze for about a year or so preceded any  chart rise. A rise in the charts represents that lower rates are coming. This Wednesday another announcement is due so this is when this chart will move.

The Euro Dollar looks just like this chart except the pattern is more free flowing.  The commercial traders positions are net long/short neutral, with the 30-day rates but that can change fairly quickly.

The chart is about as interesting as watching paint dry so until a flat bottom shows up, rates could keep going up.

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Russell 2000 Daily Chart Review

Is the bull market “choppy enough” for you? We are looking at a 5th wave run, which is one of the main locations that diagonal wave structures seemed to pop out of nowhere.  When we run into a diagonal bullish phase, then it should be a big clue that we are also in a 5th wave. Any location that contains a 5th wave, we can find diagonals.

In the EWP book they are called ending diagonals, and once they are played out the 5th wave will come to an end. In the real world these diagonal 5th waves can and travel at speeds and heights unimaginable, but they happen. They happen more frequently than we think, as they can go vertical as well. From my perspective, diagonal waves give us a big clue, that we are somewhere in a 5th wave.

In this case we have to go back to the 2015 bearish phase, which was a 4th wave correction.

The Russell 2000 is just short of breaking to a new record, but we must see if this gets confirmed next week. I think there is a Fed rate announcement coming up next week, so all hell could break loose in the short term.

It’s a new moon and St Patrick’s day this Saturday, so we will see lots of “green”. That’s better than seeing “red”,  so enjoy your St Patrick’s day because stocks could be changing color this month.

I only used the bottom trend line, and each touching point can be a temporary resting spot in a bigger bearish phase. More and more experts are coming up with bigger bearish forecasts, one which says a 40% correction is on the way.  What happens if this impending correction turns into a 70-80% correction?

When any real bottom comes then the Russell 2000 will be important,  as it shows a much bigger bottom base at the 350-300 price level. It’s not going to go to zero folks, no matter how bearish, the crowd will be at that time.

When we get closer to the start of solar cycle #25 then watch out, as the up cycle of any solar cycle can be an extremely effective “Bear Market Terminator”.

Longer term, I don’t see rates exploding in a fit of madness because when the recession comes, they will be forced to lower rates again.

The 30-day Fed fund rate charts will give us a clue when the fed starts to pause.  If the fed stays “flat” for a year or so, then this is also a potential clue that rates have gone far enough.

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