'ValueSleuth' pid='7180' datel Wrote:Chart-wise, there is a rising wedge forming. If the wedge formation continues, resolution should not be long in coming. This type of formation usually results in one of two spectacular outcomes -- either a collapse, if the metrics of the wedge indicate weakness; or a surge, if the metrics of the wedge indicate strength. In IOC's case, the metrics are clearly indicating strength -- higher highs on RSI, MACD and the like, along with all the other reported T/A factors. An alternative to the wedge resolution would be further sideways consolidation in the low $80s prior to a breakout -- which should be just as spectacular as the aforementioned wedge breakout to the upside. In any event, I have not changed my target of $130-$140 for the breakout above long-term resistance in the low to mid-$80s. We have two announcements that could be game changing -- a massive find at T-2, and/or deals on SD, SM, operator, Gulf plant approval, etc. Take your pick as to which comes first. VS
Two updates: first, IOC, second Overall market, all in mho.
IOC appears to be a hiccup from emerging up from its 2 year consolidation pattern, although it may linger around the seventies , low 80's a bit longer. However, that would strengthen it technically for a major breakout to the upside. I believe IOC is behaving similarly to the big breakout 2 years ago around 40-42. If so, a break above the old highs 82-84 would project to the 120-130 area, taking place in 3-4 months. OBV to make new yearly highs (closing 7/24) is only +107,000 volume to the upside (closing volume). In short, IOC may break to new OBV highs and linger a week or so, but this is a pretty good indicator that price follows volume (meaning OBV)
Now, I've been waiting on this for almost 40 years.....The most powerful tool in the Fed's arsenal fighting recession is Bank Reserve Requirements. The last two cuts in Bank Reserve Requirements was 11/13/74 and 1/20/75. All Reserve Requirement cuts have produced 20% or greater market rallies in the following 18 month periods. This tool amounts to an overnight immediate expansion of loanable funds in banks, and has no lag effect such as interest rate cuts do. I credit Norm Fosback's research many years ago and would highly recommend his book "Stock Market Logic" . Norm states categorically that a reduction in the reserve requirement on demand deposits for large city banks "is the single most bullish event in the world of stock price behavior." I believe a global dragging economically has a very good chance of seeing the Fed resort to this incredibly powerful stimulus tool. My bank loan model shows bank loans so far here are moving in a slight uptrend, even though the economy is sagging a bit here, as well as globally.
China uses this tool quite a bit in conducting their monetary policy, I like it because it works without the customary interest rate cut lag, which incidentally is quite lengthy in impacting the economy. As a result, I may be wrong, but believe China is in better shape to counter their slowdown than many investors think.
This time around, I would like to see bank reserve requirements cut by the Fed, and stipulations by the Fed, if the increased reserves were used for bank loans, not wall street speculation. I believe it would work very well, so don't be surprised if this Fed event unfolds ahead. I doubt , with 37 years of non use, virtually all of wall street aren't aware of this powerful Fed tool. So, when the Fed says they still have weapons left, I smile when the most powerful tool is mostly forgotten. Anyway, if you see this tool eventually used, be aware of its bullish significance.