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Major Support & Resistance (pivot points – explained):
Pivot: 6600; Support: 6560, 6491, 6451; Resistance: 6669, 6709, 6778
The Fed refraining from tapering shows its ultimate decision really will be data dependent (still not good enough) and that other harmful factors such as financial conditions (too tight, in response to June taper talk) and political headwinds (budget, debt ceiling) need also be considered. The fact markets got it so wrong though does reignite the question of communication and transparency, or maybe just misunderstanding and over-analysis.
While we had discussed credibility being lost without at least a small taper we now believe a no-show actually increases Fed cred in terms of showing prepared to surprise, that it’s not a binary decision on data and that it won’t risk jeapordising a tepid but still unsatisfactorily recovery.
We’d always expected a delayed taper (end-2013 or early 2014) due to data mixed, and said no tapering could in fact be justified. Bernanke now suggesting not even a done deal to see a reduction before year-end. After that he won’t be around and we’ll be dealing with his successor, which looks increasingly like his equally dovish subordinate Yellen.
Markets happy to have easy money for a while longer. Any excessive market froth (which the Fed has been trying to control) will also likely be taken care of via messy negotiations in Washington. Otherwise, bulls partying while bears on bubble watch.
Global markets loving the news with US equities at all-time highs and Asia reacting positively. UK index back up near Monday’s highs 6665, with support moving up to 6600, 6560 and then 6500 rising lows from end-June. A breakout at 6715 would likely open the door to a return to the May and near 1999 high of 6875.
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
Solid Green line
Possible support
Solid Red line
Possible resistance
Important: The information provided above does not constitute advice or opinion and must only be regarded as technical observations.
Click here for help with Support & Resistance Click here for help with technicals
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