If This Were A Stock....

thetechnicaltake's picture

See figure 1 a weekly price chart. The 40 week moving average (i.e,
red line) is heading higher, and prices are trading above key pivot points,
which are areas of support (buying) and resistance (selling). In essence, this
is a "beautiful" chart with lots of momentum (i.e., note the breakout
gaps). If this were a stock, the analysts and pundits would be all over the
"breakout" ---blah, blah, blah.

If This Were A Stock....

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geno-econ's picture

China will keep buying US treasury bonds just enough to keep us gasping for more consumer goods.  Meanwhile they will use the hoard of US$s to buy up overseas commodity producers. Note todays news on Bloomberg that China is in on the bidding for Potash Corp. along with BHP.  Wouldnt you do the same rather than sit on a sinking US$ and low yielding Treasuries?  Besides they have a lot of mouths to feed and will need fertilizer as well as raw materials for manufacturing and to keep their labor force active. This policy is called NATIONAL PLANNING which China openly pursues while we rely on some invisible Keynesian hand to direct our economic policy . Does not sound like a level playing field which our politicians refuse to recognize for some strange reason---perhaps the bubble bursting may be a wake up call for all of us. 

TraderTimm's picture

"We can put that check in a money market mutual fund, then we'll reinvest the earnings into foreign currency accounts with compounding interest --
aaaand IT'S GONE."


Jack H Barnes's picture

Ok, history moment... how many people in the room know that the US FED used to manage the US Treasury rates for a decade.  During that time, it held interest rates at levels like today, with out having major issues. Back than the 10 year was around 2.5% or less for ever. 

The FED along with Japan's help, can suck down all of China's horde with out a ripple in the market.  Watch... The Chinese Sword of (US Treasury Sales) Damacles is turning out to be a lot like the Paper Tigers of 1990's... A lot of discussion, and not a lot of real bite at the time. In fact they had to be bailed out...

The Fed balance sheet can handle purchasing all outstanding US Debt from foreign investors.  Meanwhile, deflation is eating away at outstand debt inside the system, and available levels of credit outside of the banking system.  While extremely unfun... its very healthy, and the US is giving its own economy a real stress test.  Those that fail, fail.  Those that survive, will start to grow again once the housing market bottoms. 

Personally, I would not be shocked if China is selling its Horde because it needs the liquidity due to its over heated internal economy.  The last I looked, the US Dollar is up in value since the Yuan was released again, instead of crashing.  I am not shocked.

Creditor nations with over capacity feel the slow down last, and hardest... It is starting to look like China might be feeling the first signs of gravity. 

What is clear, is that the US FED, using its Primary Dealers, and the deposits of cash they have at the FED, can and will mop up any major selling pressure, with those sales moved to the FED's own balance sheet and cash moved back to the PD's.

Japan is the poor nation that is going to have to wade into currency markets, dumping newly printed yen, and buying US dollars at the current market top, to help their own exports.  China is booking booking profits, it is not the buyer or sell at the margin setting prices.  If it thought it was, it just learned the hard way it is not.

The funniest aspect to all of this, is that China is actually in the market, talking down the US Treasurys, while it is actively and publically selling them.  Talk about trashing ones own book, and not even making a ripple in the pond. 

Windemup's picture

Kondratieff Winter!

truont's picture
"If This Were A Stock...."

Great, let's compare your long bonds and my gold 1 year from now, and see who wins...

No one is buying bonds except the USGovt, so it is a ponzi bubble.

Gold is being bought worldwide by central banks and investors, and in a secular bull market.

They are buying gold BECAUSE they can't get a real rate of return from treasuries or bonds after adjusting for inflation (real inflation, not the Chinese Price Input).

RockyRacoon's picture

If this were a stock....

People would still buy into it, or sell it, or do all sorts of markety thingies with/to it.

Give it up and go metal.   Or, can't you see it coming? 

"Gosh, I just didn't see THAT coming," is not a defense any longer.

Vampyroteuthis infernalis's picture

Markets can stay irrational longer than you can stay solvent. Welcome to bubbleomics!

Chemba's picture

kudos to ZH for posting the alternative viewpoint

Jean Valjean's picture

Yes but that chart has a zero in it and unless the writer is arguing that people will begin paying the US govt. to safekeep their money for them, that zero becomes an impenetrable top.

NotApplicable's picture

Aren't they already? For instance my 401k is sitting in a money market fund, as its the closest thing to cash I can get. While its returns are above zero (thanks TARP!) they sure aren't much above it.

Assetman's picture

We'll safekeep it for you.  Trust Us. -- TimmyG

william the bastard's picture

I would sell it based on the prior upside blowout. Looks like Nasdaq 5000 back there.

twotraps's picture

aren't you supposed to turn the charts upside down, put the chart on the floor and stand on your desk (for perspective of course) to get a real good view of what is happening?