Mr. Wyckoff is his Studies on Tape Reading, I believe, mentions that we should follow financially related issues as a clue to what large operators were doing. So for example the St. Paul Railroad might since it was Rockefeller controlled provide a clue to what the Standard Oil crowd was doing or thinking. Let us look at the Fed and its quantitative easing the same way. The money flowed into certain favored vehicles, stocks, high grade corporate bonds, and Treasuries. This enabled treasuries to rise in spite of massive issuance for example.Looking at the above chart notice how the volume has declined on this last rally. Today we had a small range, the lowest volume of the year with a close in the middle after making a token new high. This is bearish behavior and indicates the bulls might be running out of buying power. Heavy volume on a decline would confirm this. What I am suggesting however is that we might be seeing the end of this episode of QE.
After the volume fell off on the run up to new highs 10/25 and 10/28 bonds had the high volume wide range break mentioned above. In 4 days almost 1 month's advance was given back. While stocks made a new high corporate bonds have not recovered. This would indicate either good selling or lack of continued buying as we would see in the tapering down of QE.
Lastly observe the sell off in Treasuries themselves. Perhaps their greatest fan has slowed its buying or even discussed doing so.
After the volume fell off on the run up to new highs 10/25 and 10/28 bonds had the high volume wide range break mentioned above. In 4 days almost 1 month's advance was given back. While stocks made a new high corporate bonds have not recovered. This would indicate either good selling or lack of continued buying as we would see in the tapering down of QE.
Lastly observe the sell off in Treasuries themselves. Perhaps their greatest fan has slowed its buying or even discussed doing so.If the dollar stabilizes here I believe we can safely say that we have ended one of the greatest attempts to manipulate markets in the history of this country.
