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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (38040)	8/18/2002 2:41:54 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71088

madtrader] Fri Aug 16, 11:18pm PDT Fed CRB index Someone sent me a copy of Michael Kahn's article that cited the CRB index as a reason that the Fed should be raising rates instead of lowering them. Kind of hard to argue since CRB index has made a new 52 week high this week. If we are to believe the index, it suggests we have raging inflation. Because the commodity prices represented by the CRB index are rising. I can understand this is probably why the Fed has been reluctant to cut rates. If one takes a look of the history of the CRB index, one can also see where and when the Fed made their rate decisions. I have maintained that the Fed have always been trend followers. They started raising rates when CRB index reached a ten year low and started rising. They started cutting rates in early 2001 when the index peaked and started heading down. Last fall the index retested the lows of 1999 and bounced. Which is exactly the time when the Fed stopped cutting the rates. Based on the Fed's previous actions, it is clear to see that they are "trend traders" of sorts. And they don't like to make decisions unless there is a trend change. Given how much the CRB index has reversed, they have shown a great deal of patience by not raising rates. I believe the next month or so will force their hand one way or another. The CRB index is approaching the long term down trendline near 222. If it breaks this level and continue to rise, the Fed might even start sending hints about possible rate hike. On the other hand, if the index cannot break this trendline and starts heading down. The Fed will finally have found the excuse they needed to cut rates further. Of course, the obvious question one has to ask, just how accurate is the CRB index in reflecting real world inflation? none. [madtrader] Fri Aug 16, 6:45pm PDT market Looking at the weekly gain loss figures, one can see the DOW and OEX barely moved much. While COMPX did finally break it's late July high, thus forming an intermediate term uptrend. However, one thing is quite clear, the market is and has been in consolidation mode. A big move is coming next week. We are just not sure exactly which direction it will be. Based on the fact that bulk of the consolidation was done near the top of the major indices congestion area, one would think a most likely break would be to the upside. However, jumping the gun would not be wise. The best thing to do is to trade on the direction of the break. The move should be quite rewarding. Based on Fibonacci projections and the range of the congestion. I would expect an upside breakout will take DJI up to the 127% area initially (July 24th low to recent high as reference). That is roughly DOW 9200. For COMPX, that is roughly 1415. However, should we get a downside break, one can expect a 38% retracement. DOW 8400 and COMPX 1300 should be revisited. none