China hikes interest rates 0.25% in hopes to smother inflation

Wanted to bring some economical fundamentals in to the picture as well.
China raises interest rates by 25 basis points

The long awaited interest rate hike has just occurred today.  Since China has their Yuan pegged to the US dollar, a rate hike will be viewed by the markets similar to a US rate hike.  The Chinese have attempted to curb inflation via other methods such as raising the reserve ratio for banks three times.

Inflation is not going fade this easily, and western economies need to take note of what works and what doesn't work as I expect when inflation makes it here, it will be fast and furious.  The biggest danger is the static nature to the majorities salary contracts.

Anyways this move by the Chinese central bank will make for an interesting Monday morning.  However, job well done by wall street leading up to Christmas.  Lets make people feel good enough to spend a record amount of holiday shopping. It is annoying that apparently spending money has now become a "patriotic"  action.



 S&P 500 and Technical Analysis methods

I wanted to just mention a couple of notes on what methods / beliefs in Technical Analysis.  Mainly I want to ensure people realize that I haven't made my mind up on what technical indicators / theories work or not.  I do not advocate for one or another, I just want to present viewers with an assortment of different ways to look at stock, commodities and forign exchange markets.  From Elliott wave to MACD, all of these are interesting and should be played with to see how it can be used within your own methods, if it doesn't fit don't use it.

I enjoy reading up and learning different techniques.  For example the following is the usage of Andrew's pitchfork to predict level and time.




Looking at the S&P 500

I would like to note that the 1260 and the 1300 level are still critical and equating wave 1 to wave 5 coincidentally, wave 5 should end on December 31st, 2010.  The Cyan line for Wave 1 was drawn from the low to the high.  Wave 5 would end at 1290 which is in the range we just noted.  The 1300 is psychological and could be the natural top to this impulse wave.

The andrews pitchfork is divided by time as well.  As you can see the two targets are around the 1304 mark by January 1 (markets closed) or the 1260 area around the January 16-17.

I will repeat that the options expiration for January 22nd, looks like it could be a wild ride.  Holidays over, market over extended, oh ya every crisis from Europe to unemployment to Koren tensions are still  here.