Will the dollar finally decline to reflet relative money-printing rates versus the euro? Could we see EUR at 1.55?
click chart to enlarge
Fed defeats Cycles
Last week I described the market as the Fed with it's MoneyPump weapon of choice versus the Cycles, and their tendency to wreck havoc on markets in autumn. Well, the match has been decided, and the MoneyPump continues to reign supreme as the primary driver of U.S. equity prices now.
click chart to enlarge
The latest release of Fed balance sheet data this evening shows a strong pop in the 7-day lagged MoneyPump figures derived from the balance sheet plus a fraction of the ECB's balance sheet. Once again, MoneyPump expansions are lining up with fresh rallies in equity prices.
Signals
Cycles vs. The FED
and the war continues. Cycles push the market one way, via seasonal downward pressures, and the FED pushes markets the other, via the MoneyPump.
Who wins? Not traders it seems.
click chart to enlarge
Stock prices have closed the gap with the MoneyPump in the past few weeks. We can see how the pump has gone relatively quiet in recent weeks. I'm now lagging the pump by seven days on the chart, as that seems the best fit between renewed S&P rallies and pump surges as shown with the arrows.
click chart to enlarge
click chart to enlarge
click chart to enlarge
I've added the 1929 comparison chart to this analog set. It's just amazing how similar the patterns are in years where prices topped on or near a late summer new moon. We are now at the equivalent point to the Yom Kippur highs of both 1987 and 1929 (green arrows). Do we crash now?
More Analog Stuff
The analogs with 2012 and 1987, other years with late summer new moon tops continues to play out. That doesn't mean we crash now. But it does mean we go down.
click chart to enlarge
click chart to enlarge
But It’s Still Autumn
Weekly Update
That Summer Analog
We've written before about the tendency for markets to peak on summer new moons, and for markets to have autumn crashes. Both phenomenons occurred in 1929 and 1987. But 2012 saw a summer, new moon peak without a corresponding crash. Our observation today is that these years with summer, new moon peaks seem to follow similar paths following those peaks, with twin lows near the subsequent full and new moons. Here's a comparison of this year with last.
click chart to enlarge
Discussion continued within for subscribers...