Tuesday, March 15, 2016

I Don't Know About Ya'll, But I'm A Little Concerned About Tomorrow

Ambrose Evans-Pritchard penned excellent article this evening for the The Telegraph (US inflation rears its ugly head as global cycle nears danger zone) which has stated that with "so much fog in the air" in the U.S. with job creation, the Phillips Curve trade off between unemployment and inflation, and the labour market reaching NAIRU (non-accelerating inflation rate of unemployment) that it will not raise rates this week. However, Central Bank policy in the past has traditionally raised rates when "calibrating policy" and the output gap, so where does this leave us in the market? It's something that is being hotly debated and the ambiguity is palpable on both sides of the fence in this debate.

Looking at a couple of charts this evening in key sectors a reassuring picture is not being painted of where the market may be headed and the Federal Reserve announcement tomorrow might be a catalyst. The Small Cap ETF IWM has put in a bearish ascending triangle which broke today. Still in a large downward channel key indicators like MACD and TRIX are crossing over bearishly.
Energy ETF XLE also appears ominously positioned, too. It's downward channel appears to be getting wider due to the events of the last few weeks and needs to break resistance at $62.50 if this ascent is to be believed. Furthermore, one will also notice a bearish ascending triangle has also emerged. 
Finally, Biotechnology ETF XBI may have already broken down from it's ascending bearish wedge. I was hoping to short XBI when it reached the neckline at around $55.00 of the double head and shoulders pattern, but today may have negated that. Let's wait until another closer below the support line happens.
I don't know where the market is headed but some worrying signs have emerged!