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Will July's FedSpeak Basically Repeat April's?

|Includes: DIA, SPDR S&P 500 Trust ETF (SPY)

MONDAY, JULY 16, 2012: Will July's FedSpeak Basically Repeat April's

Several month's ago, in April, I published the following post on the issue of the Fed talking up the economy and the market.

"Sell In May And Go Away?" Or, "Don't Fight The Fed?"

The Investor's May 2012 Stock Market Dilemma!

One might ask if much has really fundamentally changed since then, besides a massive shift in market sentiment and perception.

A key statement in my post was."

"I believe the Federal Reserve's current loose monetary policy makes the Fed undesirous of seeing any precipitous conclusion to current upward price momentum in equities and subsequently generated wealth effect."

The Fed has assured us several times since then that it is also going to proceed 'a-politically' going forward (which will make the next several days a more interesting circus as He gets grilled by the highly politically charged Senate in this election cycle.

Little the Fed does or doesn't do won't be charged as politically biased or helpful to one or the other of the leading candidates, or to a potential an electoral advantage.

And the fact is, whether intentionally or unintentionally, the resulting effect of a significant Fed action (or inaction) will likely favor one or the other candidates regardless.

And the Fed knows this.

And under the cover of these charges, if will be interesting to see what the Fed actually DOES choose to do.

However; for a hint, it's always wise to remember that Fed Policy tends to prefer to 'adjust and rebalance the economic table' by utilizing the perceived 'giving in the right places' tactic, instead of the correlate 'taking away in the other place' tactic most of the time, and especially during highly visible and politically chargeable and sensitive times.

See my charts on the DJX and DJI published last week and this weekend, in preparation for this key market week.


"Sell In May And Go Away?" Or, "Don't Fight The Fed?"

The Investor's May 2012 Stock Market Dilemma!

Apr 30, 2012 12:37 PM : Market Outlook

Apr 29, 2012 6:52 PM | : DIA SPY

Some Analysts are asking why the Federal Reserve choose to talk up the economy this past week, and subsequently the markets, at such a critical technical price level time and juncture, this past week, the end of April?

They are wondering if the Fed-projected good news is as reliable as some analysts might hope.

Other more Fed-confident analysts are also electing to remind us that, regardless of present concerns of market price levels perhaps showing fatigue recently, we might want to remember that old Wall Street Mantra:"Don't Fight the Fed!"

Yet, along with the age-old mantra, and coming into particularly timely relevance next week, is another old and often reliable Wall Street Mantra: "Sell in May and Go Away!"

A key question for investors this year is, which of these mantra's will win out this 2012 market year? And analysts want to have been found on the right side of the answer, especially going forward this Presidential Election year?

I believe Federal Reserve's current loose monetary policy makes the Fed undesirous of seeing any precipitous conclusion to current upward price momentum in equities and subsequently generated wealth effect.

The present historical weights of the Presidential Cycle and Annual Cycle, going forward into this coming week and month of May, 2012, counter the Fed's objectives. So talking up the market this last week, at this key and critical technical juncture and composite market price level ensued.

However, the question remains. Will talk be sufficient to prevent the powerful market forces of these price cycles and echovectors from fulfilling themselves, especially with all geopolitical, macroeconomics, and domestic employment uncertainties currently being considered by the market?

I believe the market itself will tell us the answer to this question very soon.

However, I also maintain, on a historical price basis, that (in the meantime) wisdom may reside in applying and holding full net portfolio composite price level insurances (hedges and hedging applications) going forward into May this year...

Such a strategy may be particularly timely on a risk-to-reward basis for this next quarter, and beyond...


A Technical Cyclical View:

Below is a Five-Year, Weekly, OHLC, Chart of the DJX, the 1/100TH Index of the Dow Jones 30 Industrial Average.

This chart highlights the key Presidential Cycle echovectors, and 4-year echobackdates in 2008 for the current 2012 market year.

It also includes some key annual echoVectors, and 1-year echobackdates in 2011 for the present 2012 market year (currently in force as a result of 'follow through' to key 2010 echovectors and 1-year echobackdates to the 2011 market year).

The chart is very time-cycle revealing, and price-support level and price-resistance level revealing, and longer-term price support pivoting-vector revealing.

Highlighted in pink, notice the current Presidential Cycle echovectors and the Presidential Cycle echobackdate period we are currently entering.

Highlighted in aqua-blue In pink, notice the current key annual cycle echovector and Annual cycle echobackdates, and last years springtime upward momentum finish we are currently entering.

Also, highlighted in horizontal solid green, notice the price equivalency basis recovery level we have now achieved on this months Presidential Cycle echovector.

Highlighted in red and green spaced-lines are various key Presidential Cycle echovectors and Presidential cycle echobackdates that came into play in last year's spring and summer price level swoon.

Their co-ordination is quite remarkable, especially regarding various near-term relative strength and relative weakness time-points.

Perhaps this view warrants caution?

Or, perhaps this view opportunes a key breakout?

What do you see?

Which Wall Street mantra do you hear?


DJX: 1/100TH of the Dow Jones 30 Industrial Average

5-Year Weekly OHLC

Key Presidential Cycle EchoVectors and EchoBackDates

Key Annual EchoVectors for 2012 and 2011.

Key 1-Year EchoBackDates for 2012 and 2011

(Click on chart and click again to enlarge and zoom)

Disclosure: I am short SPY.

Themes: market-outlook


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Chart illustrations Utilize the Following Terminological References

From the EchoVectorVEST 'TradeMark Terminology Matrix' and Reference Guide:


EV Echovector, EchoVector

EBD EchoBackDate

EBTP EchoBackTimePoint

FEV Forecast EchoVector

ASEV Asian Session EchoVector (Shanghai Index Centric)

ESEV European Session EchoVector (Continent Centric)

DEV Daily EchoVector

24HEV 24Hour EchoVector

2DEV 2Day EchoVector

48HEV 48Hour EchoVector

WEV Weekly EchoVector

2WEV Bi-Weekly EchoVector

MEV Monthly EchoVector

2MEV Bi-monthly EchoVector

QEV Quarterly EchoVector

2QEV 6-Month EchoVector, 2 Quarters

3QEV 6- Month EchoVector, 3 Quarters

4QEV 12-Month EchoVector, 4 Quarters, Annual

AEV 12-Month EchoVector, Yearly

6QEV 18-Month EchoVector

1.5AEV 18-Month EchoVector

2AEV 2-Year EchoVector

CCEV Congressional Cycle EchoVector

4AEV 4-Year EchoVector

PCEV Presidential Cycle EchoVector

8AEV 8-Year EchoVector

RCCEV Regime Change Cycle EchoVector (4 or 8 Years)

5AEV 5-Year EchoVector

FRCEV Federal Reserve EchoVector, 5-Year

10AEV 10-Year, One Decade, EchoVector