"Quadruple Top": Stocks Fall As Trade Optimism Fizzles, Powell Looms
as that it for the "trade war optimism" euphoria?
(regarding the SP Quad top cap-after the 2008 crash these patterns would emerge and show themselves to trafer's who began to position themselves for the eventual outcome. The system then yanked te markets the other way. Can recall wen GM was floundering around and flashed the death cross where the 50 day moving average crossed below the 200day moving average-can look that up. Even remember Maria B telling everyone that when she was at CNBS-not her fault as just reporting the news. When that was being told to everyone the system knew it would be acted upon so it basically pulled the chain on the over-crowded trade that was set up to profit by shorting the entire market being short by sending it the other way. Translation- do not take these signs as being set in stone
While traders were delighted to buy the rumor and then buy the news of the China March 1 tariff extension, expecting an imminent trade deal between the US and China, sentiment soured on Tuesday as world shares took a breather on Tuesday after hitting a five-month high, with global markets dropping as the rush of optimism over U.S.-China trade talks turned to pessimism, leading to a sea of red in world markets with even the Chinese stock bubble pausing overnight as concerns about a breakout in hostilities between India and Pakistan spooked the region, while in FX the pound soared, hitting the highest against the Euro since 2017, as the May government gave signs it was willing to delay Brexit.
Europe's Stoxx 600 Index slumped and S&P 500 Index futures drpoped after President Trump raised the possibility of signing a new trade deal with Chinese counterpart Xi Jinping, but cautioned an agreement “might not happen at all.”
“It looks like they will be coming back quickly again,” Trump told reporters Monday, referring to the possibility of Chinese negotiators returning after a week of talks on trade. “We are going to have a signing summit, which is even better,” he said, adding: “We are getting very very close.” However, the president promptly tempered his enthusiasm, noting that a deal “might not happen at all.” As Bloomberg notes, with Trump set to hold another summit with North Korean leader Kim Jong-Un this week, a diplomatic effort in which China will play a critical role, the risk of a setback remains significant.
And so with the S&P once again failing to break decisively above 2,800, is it time to consider the dreaded (and technically non-existant) "quadruple top" formation, and the possibility that the next big target for the S&P will be the December lows.
Traders will now focus on Fed Chair Powell's semiannual testimony on monetary policy and the state of the economy over two days to House and Senate committees. With the Fed already fully dovish, there is little that Powell can say to "dove" up the case, and the risk is that he comes off sounding hawkish.
As DB's Jim reid asks, will Powell keep the recent dovish Fed momentum going when he delivers his semi-annual Humphrey Hawkins testimony before the Senate Banking Committee? In terms of what to look for, our US economists expect Powell to reiterate that “patience” remains the order of the day and in this regard, the January FOMC meeting minutes should be a good template for his prepared remarks. The minutes indicated “a patient posture would allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge and, in particular, could allow policymakers to reach a firmer judgment about the extent and persistence of the economic slowdown in Europe and China.” In short, expect the Chair to convey the message that the Fed is cautiously optimistic about the outlook but will be monitoring conditions and would be willing to adapt as the uncertainties realise.
Overnight, Fed Vice Chair Clarida said that the Fed pays a lot of attention to whether the curve is flattening because of a fall in inflation expectations and reiterated that going ahead the Fed is likely to be patient and data dependent.
Meanwhile, JPMorgan analysts urged investors to curb some of their enthusiasm. “It is notable that 1) no new deadline date (on U.S. China trade talks) has been set and 2) there weren’t any formal statements published from either side following the talks in Washington.”
rest at link
https://www.zerohedge.com/news/2019-02-26/quadruple-top-stocks-fall-trade-optimism-fizzles-powell-looms
https://www.bloomberg.com/markets/stocks/futures
https://www.dailyfx.com/crude-oil?ref=TopRates