As recently as on January 6th, S&P was pushing above 940 and everything looked hunkydory in the equity land. Just last week the credit markets looked stable. What a difference a week makes!
- Sterling is losing ground, CDS spreads on UK debt are shooting up (151 bps at the last check – up from under 120 two days ago.] “UK is finished,” said Jim Rogers yesterday. As I mentioned a couple of days ago, the gathering storms from imploding western banking sector – especially from UK – are proving to be too much for an O-bounce. Click here to see a chart of shrinking market cap of major financial institutions.
- Markit iTraxx Crossover Europe index was below 1000 on Monday and at the last check it is over 1060. Via FT Alphaville:
The iTraxx main index of European high grade companies edged out to 174bp-179bp on Wednesday, wider than Tuesday’s close at 172bp, and the iTraxx Crossover list of sub-investment grade companies also gapped out to 1062bp-1067bp on Wednesday morning, compared to 1035bp at the close yesterday, according to a trader.
- Markit CMBX.NA.AAA.5 (index on AAA rated North American CRE debt spreads) appears to be on the verge of exploding.
- S&P breached a critical support at 817 yesterday. Transports have taken out the Nov lows and I expect them to lead the markets lower.
Looks like a lot has changed on the flip of a dime. I expect a weak bounce and a continuation of the downtrend to new lows.
GM all..
FX Movers and Shakers – Wednesday, January 21, 2009
Trading Strategy – GBP. GS hosts a conference call at 8 am hosted by Ben Broadbent (US Toll free number 1 800 762 8973). The focus on the UK banking crisis begs the question about the rest of the world. The non-performing loans in Asia are likely to grow as industrial capacity proves deadly; the European issue of bad loans not yet valued remains and the fixes aren’t yet known. The market chases financials and the solution – as money becomes so cheap as to inspire fear rather than greed. The way of GBP and the technical power of breaking 1.4350 got us to the pivotal 1.3750 support and break today – so the unwinding of semi-reserve currency status leaves other currencies primed for a similar competitive devaluation. In that 30% move lower in the UK TWI rests the real danger in being too bearish – as the easing of financial conditions makes for a strong positive for anyone involved in UK exports. The MPC minutes on the GBP move should be read closely as well as the tone was hawkish – suggesting a limit to the BOE and GBP moves. But once a currency breaks and the government applauds the easing and help its hard to stop. RUB moves today may be an case study even as the stepped devaluation process was whispered to be near an end. So we may be in a stage two place for FX where no one trusts paper but they can’t afford to buy the real stuff – like commodities as its usefulness remains a wish more than a promise.
Main Movers –
GBP down 1.2% to 1.3760 – This is the key pivot point with market beared up and thinking 1.22 next – 1.4050 and 1.4350 resistance.
AUD off 0.3% to .6490 – Modest drop back in AUD even as JPY holds flat – some point to BHP stories on layoffs
CAD up 0.3% to 1.2625 – The tug of corporate hedging vs leveraged buying of USD puts market into 1.2550-1.2780 range.
SEK up 1.5% to 8.3250 – This is Oberg speech and market unwinding spec positions. NOK/SEK key to watch.
Can someone please post what fibs we should be watching for this retrace?
Thanks,
They are on this chart, which you have seen:
THIS AND ONLY THIS IS THE
ONE TRUE WAY!!!!!
http://social.stocktock.com/photo/spx_finishingwave1_090120-2
Be sure and read the third comment to avoid taking me too seriously.
Bear Bones!!
Yesterday:
The S&P held the open of 850 (849.64 actual) creating a great short opportunity. Since the 850 range was support on the prior move it becomes resistance when prices trade lower. Prices broke going through a corrective move reaching a low of 804.47 giving a profitable trade. Here are my comments….
“Prices should have a corrective move or a retest of the support ranges and of course the 850-852 range is still important.”
“We are starting to see the signs of the primary trend resuming.”
Today:
Watch out for the short term low that has been created at 804, since this will be a short term low. Prices should continue lower but the 800 range will play some important support. I still believe that the primary trend has resumed and will start to accelerate to the downside. We are seeing the banks having additional problems and this will only increase. A break of the 800 range should bring prices back to the old 740 or 770 lows and of course traders should watch for the potential double bottom. I do believe that we will see a fast decline especially if we break the major lows.
Bulls: Prices are getting closer to the prior lows where there should be major support so if prices are to hold the bulls could see a bounce there as a double bottom.
Bears: So far the price action is helping the bears, but there needs to be caution near the prior lows for a bounce. Prices have accelerated to the downside and we seen the breaking of several important support ranges. The support ranges of 770 and 740 are important so traders must watch there. We should see a continued decline and it will increase with momentum.
Support / Resistance:
828-830 2nd resistance
818-820 1st resistance
785-787 1st support
770-772 2nd support
Notes:
I wanted to make a point of stating that I still feel prices will reach the 400 range soon, and feel strongly more than ever that this will occur. The economic crisis will continue and get worse leading to further selling pressure. The banking industry along with other sectors will have further troubles. Panic has not come in yet and this should start to happen soon. I have stated that a change of trend could occur on Jan. 26th. and it may be a low. This of course is dependant on the prior days price movement.
I have included a chart of yesterday’s trading because it seemed that some were confused by the trading action. Traders must keep things simple and this will help keep your eye on the correct trend.
Gannfann
I’m buying more shorts at 816…and stopping out at 822. A little loose, but should pay the bills if it works out.
despite gann’s and others’ analysis, i think there’s signifcant evidence of a short squeeze and multi day rally to 860 or 880 right now (the one we looked for prior to rbs)
what is this significant evidence?
ewave, oversold technicals, and common logic
;p
common logic tells me when the worlds banks are BK..new lows should and will be made..
No intraday commentary?
Mohan has a note at the top of this one to use it for intraday.
Where is everyone? Server trouble again? Opinion is AAPL will beat estimates, yet again offer muted guidance. How about some transparency for a change! Holding 85 calls and will will take profits before the close. p.s. I miss the tech analysis video. Yes, there are other sources.
I know of Alphatrend. Any others you recomend?
http://breakpointtrades.com/controls/preview.php?la_id=608
pretty nice, wonder if this guy comes here too? Anyone know?
hey- thanks.!
Bull flag set-up on the indices?
broke 822. Could be trap, but this seems like a healthy rebound day.
And the VIX is getting hammered, down over 10%
Idan posted an intraday blog. He would be providing intraday updates with TA. My TA abilities are limited and hence my updates won’t be good. We can move the comments over there.
there goes oil…DIG was a good call at the close yesterday…thanks, can’t remember who called it.
SRS hovering at 67….must nibble at the next test and resist.
testing 818 from above…we’ll see.
massive bear trap?
I still am biased that we are marking out a congested sideways pattern.
We cannot just look at the indices. All the sector and major industry ETFs seem to be moving in a sideways or sloppy rounding bottom pattern on the daily / 6mo charts.
Trade safe.