The Fed Has Gone Too Far, Stock Market Trading Insanity

The USDX took out the 76.67 level without a fight. That’s the second major support level that’s been literally blown away in the last three weeks and the fifth since the beginning of June.

All I have to say is when does it stop before the Fed realises it cannot fulfill its mandate of maintaining employment? Do we have to hit 50 in the USDX before the bond market collapses and the Fed figures out they just ruined a 300 year old country?

I knew that the dollar index was on its way down, but it should not be in a free fall at this point. I thought that maybe there would be an upward rally for a few weeks… considering we’ve been in oversold territory on every technical indicator for weeks… I was wrong. When you go to pay your bills, buy your groceries, fill your gas tank, just remember what the Federal Reserve is doing. During a period of economic contraction, recession, depression- the upside is supposed to be that the people have the benefit of a strong currency. Instead, the Fed wants to weaken our currency and make the pain that much worse. History is repeating itself in front of us….

Here’s an article that CNBC posted on the bond auction.

An already-tough week for Treasury auctions turned dramatically worse Thursday when investors skipped out on a 30-year bond sale.

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The $13 billion of reopened long bonds was a mess: the yield of 3.852 was well above the when-issued level; a bid-to-cover ratio, or the measure of how much was bid compared to each dollar auctioned, came in at 2.49, which was the worst since February and well below the average of 2.70; and foreign interest, as measured through indirect bidding, was a paltry 32 percent.

The poor results added to earlier losses for the bond market, which fell even though the stock market also was off in afternoon trading.

The 30-year was half a point lower in price to yield 3.85 percent, while the benchmark 10-year note shed 10/32 to yield 2.46 percent.

Treasury yields have fallen in recent weeks as traders piled into the market on bets that the Federal Reserve would begin another Treasurys purchase program to help stimulate the economy and create healthy inflation.

Traders also awaited Friday’s key speech by Federal Reserve Chairman Ben Bernanke and a set of economic reports on inflation and consumer sentiment.

“The focus is going to turn to a pretty event-filled day tomorrow with two economic reports, (consumer prices) and retail sales, and the chairman himself, Bernanke, is going to be speaking, and he usually has dovish things to say.”

http://www.cnbc.com/id/39668055

Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein (1879 – 1955), (attributed)

Insanity in individuals is something rare – but in groups, parties, nations and epochs, it is the rule.
Friedrich Nietzsche (1844 – 1900)

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

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