Battle OF The Fibos & The Negative Yield Wall
Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on Fibonacci numbers. Each level is associated with a percentage. The percentage is how much of a prior move the price has retraced. The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a Fibonacci ratio, 50% is also used. – Investopedia
Traders and ‘bots are clearly in control of this market.
We are fairly convicted the 50% Fibo won’t hold, which sets up a quick move to 50-day moving average at 2721-ish.
Source: Carl Quintinalla
Be careful out there, folks, the shorts have been destroyed in the big bounce off the March 23rd bottom and there is very little holding up this market now x/ hope, delusion, and the specter of more financial asset shortages, in our opinion.
Bonds
Moreover, there is little room in yields for bonds to now be used as a stock market hedge or short proxy.
Though it’s possible the trading momo boyz & ‘bots may believe Jerome Powell will take them out of their longs at -2.0 percent, we have our doubts as it will create a real problem for the Fed and Treasury.
It’s [negative interest rates] an unsettled area. I know that there are fans of the policy, but for now, it’s not something we’re considering. We think we have a good toolkit, and that’s the one we’ll be using.” – Chairman Powell, May 13th
Though the Chairman was likely referring to only policy interest rates, it is not clear that if traders pushed U.S. notes and bond yields into negative territory the Fed would be there to buy as part of their QE program. If they do, imagine the shit show this would cause with the monthly Treasury auctions.
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