Gear up federal debt ceiling or face meltdown.

US lawmakers must raise the $14.3 trillion federal debt ceiling,that is raising the legal limit on government borrowing limit by Aug. 2 failing which there will be a financial tsunami that will send ripples to all sectors of the financial world like a domino effects.A U.S. default could throw the economy back into recession and create panic in global financial markets.
President Barack Obama has called for compromise as party leaders seek to craft a deal that raises the legal limit on how much the U.S. government can borrow while slashing projected deficits over the next decade. Democratic and Republican leaders have been meeting, but discussions have faltered over taxes.
If Treasurys are no longer risk-free, then all financial assets have to be repriced against another a benchmark and there will not be any more safe haeven for all assets class.Interest rates on all forms of debt -- mortgages, car loans, government -- will spike, resulting in a renewed credit crunch.
Borrowing will come to a halt. Business will come to a halt. And even more troubling is the possibility that a halt in the flow of credit will cause commercial paper markets to dry up, resulting in a run on money funds.
Meanwhile Moody's Investors Service and Standard & Poor's both threatened to downgrade U.S. debt which was announced after the market closed.The ratings agency said it was placing the United States' Aaa rating -- its top level -- on watch for a possible downgrade cited "a rising possibility" that Congress and the White House would not agree to a deal to raise the nation's debt limit on a timely basis.
Separately, Standard & Poor's privately has told lawmakers and business groups it might cut the U.S. credit rating if the government fails to make any of its expected payments -- including Social Security checks -- even if it makes all its debt payments, sources told The Wall Street Journal.

Tracking the Dow on Wednesday,13/07/11. Economic events:Import Export prices,EIA Petroleum Status,Bernanke Speaks. Dow futures 2 market days to expiry.
9:30am:--Bullish 40.0 point gap up.

10:30am:--Session high,Unshaven bullish marubozu followed by a bearish inverted hammer.

11:30am:-Morning star and bearish engulfing.

12:30noon:--A double top morning star.

1:30pm:--Hangman at bull pivot support.

2:30pm:--Graveyard doji at MAV support.

3:30pm:--Opening gap being half filled.Bearish hammer.

4:00pm:--Last minute short cover,a bullish hammer at the bearish pivot support.
July mid week candlestick is now a bearish hammer.Pairing it with previuos week will be a bearish harami which is highly risky for an imminent crash.Stocks got an early boost after Beijing reported that China's gross domestic product (GDP) grew 9.5 percent in the second quarter, slower than in the first quarter, but still beating analysts' expectations.
Bernanke fuelled the bullish sentiment on Wall Street when he told the US Congress that the Fed was prepared to renew its stimulus efforts if the country's economy remained feeble.The problem of the debt ceiling affected the markets today. The Dow's big rally stalled out in the late morning and nearly fell apart entirely in the last hour of trading.

Fed's hidden agenda.

In the mid-2000s, Alan Greenspan was the hero of the financial world. With his blunt philosophy of inflation, Greenspan was credited for turning the tech-bust into a real estate and financial boom.
Following the 2008/2009 meltdown, Greenspan morphed from hero to scapegoat similar to some of the traders at some of the reputable financial instituitions and hedgefunds that blame their fund managers for making huge losses.
Bernanke carried on the torch of fearless Keynesian Fed Presidents and made it on the cover of Time magazine within his first term.
According to Bernanke (quoted in the Washington Post), inflating stock prices is the golden grail of today's monetary policy: 'Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.'
So by inflating asset prices,the main benefacto will be the Wall Street bankers.Hence,retail investors have to bail out from mutual funds and start chasing after stocks.He has been artificially depressing interest rates takes away wealth from savers and distributes it to borrowers.
The effects:-
August 2007: Fed lowered discount rate, unemployment rate at 4.7%
December 2008: Fed reduced rates to just north of zero, unemployment rate at 7.4%.
March 2009: Fed launches QE1, unemployment rate at 8.6%.
November 2010: Fed launches QE2, unemployment rate at 9.6%.
Tracking the Dow,Friday 10/12/10.(5 market day s to Quadraple Witching)

09:30am:--Opening bull but was shortlived.

10:30am:--Pullback to find early session low.Bulls hammering the bottom.

11:30am:--A retracement to session MAV resistance.Bearish shooting star.

12:30noon:--A breakout of the morning MAV resistance line,bulls showing their spinning colours.

1:30pm:--Currently holding at bull support line.Inverted bulls.

2:30pm:--Another pullback to the bull support line,a double bottom.

3:30pm:--Another pullback to bull support line for the 3rd time.Morning star noted.

4:00pm:--Last minute spike up with a bearish hammer close.

It's time for the rollover of contracts prior to the index/options futures expiry.

Eight days before the contract expiry,the high volatility starts.The following weeks will see the bulls creeping up Tuesday's upper shadow since last Friday it was holding superbly above December month bulls pivot support.

The markets benefited from strong trade numbers in the U.S. and China and hopes Congress will extend the expiring Bush tax cuts.

Hot money and currency war.

Fed Chairman Ben S. Bernanke said in remarks at a Boston Fed conference that the central bank may expand asset purchases or change the language in its statement, while saying “nonconventional policies” have costs and limitations. “There would appear -- all else being equal -- to be a case for further action,” Bernanke said.
The central bank will release on Oct. 20 its Beige Book survey of regional Fed banks. Last month, the report found the economic rebound showed signs of slowing. Minutes of the Fed’s September meeting released on Oct. 12 indicated that policy makers were poised to take more easing steps “before long.”
The U.S. Treasury Department said it will delay a report on international currencies, including China’s yuan, while citing progress in the acceleration of the pace of the yuan’s rise.
The yuan advanced 0.5 percent this week and touched 6.6406, the strongest level since the central bank unified official and market exchange rates at the end of 1993.
The report will be delayed until after the meetings of the Group of 20 nations in the coming weeks, according to a statement from the Treasury.
The greenback has tumbled 5 percent against the yen since Sept. 15, when Japan acknowledged intervening in the market by selling the currency to prevent its strength from undermining the nation’s export-dependent economy.
Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF),quoted that "There is clearly the idea beginning to circulate that currencies can be used as a policy weapon.
"Translated into action, such an idea would represent a very serious risk to the global recovery," he said.
Unilateral action by one central bank can, therefore, set off or fuel disputes in other parts of the world. Although America sees itself as a victim of global currency intervention, many people argue that its own policies are the cause.
Meanwhile short-term capital flows(hot-money) are disturbing emerging economies and it can be a catastrophe.The US is the epicentre, causing chaos over the rest of the world by printing cheap money.
Tracking the Friday's Dow,(Index Futures Expiry Day)
Asian Index Futures expiry,29/10/10.Pre-rollover contracts,22/10/10

09:30am:--A bullish 40.0 points gap-up with a bearish dark cloud cover.
10:30am:--Index nosedived to session low,bullish hammering out the low.
11:30am:--Rebound to MAV resistance line,graveyard doji confirmation.
12:30n00n:--After pulling back to the bear pivot support,a rebound at this moment failed to kiss the MAV resistance line.Hangman checkmate.
1:30pm:--A second attempt to test the resistance fall short of target.Graveyard doji again.
2:30pm:--Another rebound that failed the MAV resistance test.
3:30pm:--Fallback to bear pivot support line,morning star followed.
4:00pm:--A third MAV resistance attempt,complete failure.Bears overwhelmed the bulls in today's tug of war.
Two bearish dojis,covering back the whole of Wednesday's candlestick body greeted the Index/options futures expiry day.
On the whole the three pairs are still hoovering above the bull pivot support and it's still a bullish play.
Friday's early bulls cheered the market after a speech by U.S. Federal Reserve Chairman Ben Bernanke pointed to another round of monetary easing from the central bank.
The University of Michigan's Consumer Sentiment Index fell in October thus giving the bears a bigger leeway to find a reason to sell the market.

Annual mountainside conference.

It has been an annual affairs that Central bank officials from more than 35 countries usually travel to the Jackson Lake Lodge, elevation about 6,900 feet (2,103 meters), to mingle with leading monetary policy makers and thinkers.
A week prior to this grand event,the US market will normally crash and this time around Asian markets defy this American tricks and go against the trend.
Between debates over new research and crisis management under chandeliers, attendees take hiking and rafting excursions in Grand Teton National Park.
This year's gathering centers on the theme, "Macroeconomic Challenges: The Decade Ahead." Bernanke and European Central Bank President Jean-Claude Trichet are the focussing speakers.
Three key crisis management approach by the Federal Reserve:-
1) substantial easing of monetary policy despite inflationary pressure.
2) Offer liquidity to support financial markets through collateralized lending programs.
3) regulators to monitor the health of individual financial instituitions and developing new regulations
Tracking the Dow,Friday.Asian index futures contracts rollover.
9:30am:--A bullish 50.0 points gap up.The Commerce Department made a smaller-than-expected cut in its estimate of second-quarter economic growth.
10:30am:--Earlier pullback to find an early low has now retraced to near session high. Second-quarter growth in the U.S. economy comes in at 1.6% -- not as bad as economists and investors had feared.
11:30am:--A new session high,spinning top.Consumer confidence rises slightly in August but still remains weak.
12:30noon:--Consolidation time.Bearish hammer.
1:30pm:--After pulling back to bull support pivot,three ascending soldiers seen.
2:30pm:--Bulls bringing it higher.Federal Reserve Board Chairman Ben Bernanke said Friday that the central bank would not sit idly and let the U.S. economy sink into a period of deflation.
3:30pm:--After digesting the Fed's news,a slight pullback but the bulls are still supporting it.
4:00pm:--A new high of the day closing.Consumer confidence rises slightly in August but still remains weak.
Looks like every quarter there'll be threatening news so that a trough formation depicting the head and shoulder pattern can be materialised.
The beginning of July was a bull party and towards the end of the third month comes the shorties.
Friday is a bullish spin and a rebound is on the card aided by the Fed who has just open his mouth.

Helicopter Ben is back.

US Federal Reserve Chairman Ben S. Bernanke
was nominated to a second term today by President Barack Obama.
Bernanke today pledged to work toward restoring stability to financial markets and the economy.
Bernanke, 55, slashed the main interest rate almost to zero and pumped $1 trillion into the banking system to unfreeze credit markets. He now must guide the world’s largest economy back to growth and reduce unemployment that the Obama administration today forecast would surge to 10 percent, while also planning to shrink the Fed’s balance sheet to prevent a surge in inflation.
Why nickname him "helicopter Ben"?Because he mentioned that the government can always avoid deflation by printing money meaning he has a helicopter drop of money-a helicopter printing press as well.
At that time in his footnote to his speech,Bernanke noted that "people know that inflation erodes the real value of government debts and therefore,that it is the interest of the government to create some inflation."

Tracking the Dow Tuesday,25/08/09.(3 weeks to Triple Witching)
Aisan Index Futures Expiry:31/08/09

9:30am:--Bullish 30.0 points gap-up.

Fed Chairman Bernanke has been nominated to a second term.

10:30am:--After finding early high,a pullback to bearish pivot with bullish support.

Participants are taking into account news that the FDIC may ease the ability of private equity firms to buy failed banks, according to Bloomberg.com.

11:30am:--A retracement to bull pivot was checked by bearish dojis.

The S&P/Case-Shiller Home Composite 20-City Index for June showed a 15.4% year-over-year decline, which isn't as bad as the 16.4% year-over-year decline that was expected.

12:30noon:--A shooting star ends the morning session showing a graveyard doji.

The Consumer Confidence Index for August came in at 54.1, which is above the 47.9 that was widely expected and marks a sharp improvement from the upwardly revised July reading of 47.4.

1:30pm:--A pullback slightly below the MAV support having the bearish dojis in control.

The Congressional Budget Office (CBO) has released an estimate stating that the federal budget deficit for 2009 is expected to reach $1.6 trillion.

2:30pm:--The opening bell gap was filled half way being checked by the morning star,bullish spin.

Stocks grapple with renewed selling pressure.

3:30pm:--A retracement to the MAV resistance line was hampered by a bearish harami.

The latest bout of selling has been particularly unkind to energy stocks.

4:00pm:--Ending the day with a hangman at the bear pivot.

This looks like profit-taking is to be set in the following session just in time for a pullback for the Asian Index Futures Expiry.
The Dow is still playing a contrarian role of bullishness despite the technical chart shows a shooting star.

Monday & Tuesday session are holding above the bull pivot and any pullback will be minimal,possibly to cover the half body of Friday's candlestick.

Meanwhile the Consumer Confidence Index for August, which came in at 54.1. that was above the 47.9. . However, market participants should remember that consumer confidence is not highly correlated with actual spending.

Grizzly Bears at Jackson Hole.

It's an annual event three days before the Federal Reserve meet at this mountain retreat,the grizzly bears of Jackson Hole will always ransack Wall Street to get their best piece of meal.

Comments from various policymakers at Wednesday's Federal Reserve conference in Jackson Hole, Wyoming, will be crucial in highlighting divergent central bank responses to the improved global outlook, which gives trading opportunities.

Central banks, faced with different stages of economic and financial stabilisation, are not taking a uniform approach to exit strategies.Central bank response functions will be varied. The global recession did not strike all economies the same way, and this will become increasingly clear in the recovery phase.
Norway and Australia have already been hinting at raising interest rates, whereas New Zealand could still ease policy.

The Bank of England stunned markets last week by expanding its quantitative easing plan to 175 billion pounds.

The Bank of Israel has become the first central bank to announce the end of unorthodox monetary easing by ending the bond and FX buying programme over the past few weeks.

Tracking the Dow on Monday,17/08/09.(4 market days to Dow Futures Expiry)
Asian Index Futures Expire 31/08/09.Rollover contracts starts 24/08/09

9:30am:--Down goes humpty-dumpty with 150.0 points scrap.

A global selloff, which was spurred by disappointing economic growth in Japan.

10:30am:--Damage has been own,no way to fill up the opening gap-down.

The New York Manufacturing Index showed its first positive reading, which indicates expansion, since April 2008 and its best reading since November 2007.

11:30am:--A slight pre-noon retracement.

The Fed announced it has extended its Term Asset-backed Securities Lending Facility (TALF) as part of its ongoing effort to improve credit and liquidity conditions.

12:30noon:--Failed to reach even the bear pivot and the hangman waiting.

Despite the good announcement,nothing much can lift investors spirits in this session.

1:30pm:--It's the bears meal.

Weakness is widespread.

2:30pm:--Still holding below the day's bear pivot.

Crude is trading 2.8% lower at $65.61 per barrel.

3:30pm:--Bears engulfing.

Losses remain significant.

4:00pm:--A bearish engulfing checking the spinning bulls.
The start of second half August,the beginning of Nikkei 225 futures new contract month(august),the slotting of poor Japanese economic report at the right timing with an excuse to sell the skyrocketing market which in turn helps the Dow to find a lower shadow because it has a bald shaven August opening.Goldman Sachs Japan,you're damn good.
So the Dow's candlestick to date has a long upper shadow which will be short-covered in due time.