HXU update

hxu jan 22 2015 up 1HXU Jan 22 2015 up 2HXU jan 22 2015 d

We pointed out not too long ago that there was, perhaps, a triangle forming in the and if there was, it would almost certainly have to be a 4th wave. We did say that we would be at a loss to explain what would cause such a move. Well we know now as the governor explained that this was the time to move (first time since Sept. 2010) to lower interest rates by a quarter to 75 basis points. Ostensible this was because the increased risk resulting from the oil price collapse. No sane person understands how 1/4% will realistically change anything and when asked, neither the governor or the deputy cared to concede that this action might have the opposite effect as the message clearly is that things are a lot worse than they were thought to be any time over the preceding 3 to 4 years. Apparently market psychology in Canada is irrelevant.

    Then Draghi comes through with his trillion and a half Euro purchase of bonds from the member states. He was no doubt moved by events in Canada that showed that expecting unexpected events is an art in its infancy, at least among economists, not a single one of which had anticipated anything of the sort. Whatever, these two circumstances are good for about 500 points on the TSX.

   The HXU moved as expected. The question now is, 1. are we in the thrust up. 2. Is the triangle not yet complete, or 3. could we be looking at a series of 1-2’s that are the beginnings of a big bear market. We have absolutely no idea but at least you can tell from the above 3 charts when these 3 possibilities will be eliminated.