Monday, October 17, 2011

@Global Market's Technical Analysis Still Rule Against The Others

Third Time Lucky for the Technicals?
In May of 2010, immediately following the flash crash many investors started to become bearish (nervous) regarding their position in gold and equities. Once the general public became aware that the stock market could fall 10% in a matter of minutes, investors became very cautious. Suddenly protecting their capital and current positions was at the forefront of their investment process.


17/10: European shares pared gains after German Finmin Wolfgang Schaeuble said the EU summit on Oct. 23 would not produce a definite solution to the euro zone debt crisis.

Technical Take: S&P 500 Is Getting Close To A Top
The past few months have been very difficult to navigate for retail investors and institutional money managers. The huge week to week price swings and increased volatility have made the current market conditions exceptionally difficult to maneuver. Day traders are about the only group of market participants that outperform during periods such as we have seen since the beginning of August.


The Next Shoes to Drop
The US economy is in a recession that will probably extend into next year. This may not be cause for concern, because the stock market might already have priced-in the sort of earnings decline that recessions bring about. The reason to be concerned about downside risk in the stock market is that the recession is not widely recognized, and most analysts are still projecting growth in earnings over the next 12 months.


Yet Another Reason Why the Euro Is Doomed
The euro crisis is already concrete in everyday life in the debtor nations, but it remains abstract in the donor nations. Imposing hardship on the northern citizenry to "save" the euro is politically impossible because the "gains" from the hardship are theoretical while the hardships will be immediate and real.


By the Numbers for the Week Ending October 14
Brief comments:  Both gold and silver advanced for the week in USD terms, but gold declined in euro terms on a sharply stronger single currency.  Note that even after a 201-basis point drop for the DXY Tues/Tues (to 77.58) ICE commercial traders kept the downward pressure on the greenback index by adding another 3,662 contracts net short the DXY.  53,000 + contracts net short is a very large stand and represents 76% of the open interest.  The “ICE coms” were rewarded with another 96-ticks lower by Friday’s close to 76.62 – a major reversal for the USD. Minor negative money flow for the largest gold and silver ETFs, barely worth mentioning.


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