With the Fed not in any position to raise interest rate in order to support the value of the dollar without crashing the stock market, it is now the ECB and the BOJ that has been asked to further increase their already oversized QE amount, in order to weaken their currencies hence strengthen the US dollar.
Strong US dollar is needed to keep the flow of international capital into the US in order to keep the US stock and bond market elevated for the up coming Presidential election in November. The Fed would not want Donald Trump to win, so they will do whatever it takes to create an illusion that the economy is doing well and that the stock, bond and real estate markets are all doing well. However, the forces of global deflation is intensifying and may eventually overwhelm central banks.
The equity market simply traded sideways on Monday even with the ECB and the BOJ threatening to intensity their QE program.
Key inflection price level for NQ on Tuesday remains at 4790.
-- Selling should remains under control if NQ remains above 4790.
-- Selling could come back into the market if NQ should trades below 4790, supports are 4771 then 4745.
