DXY (weekly info)new low 75.07
trend=down
low= 75.07
rev= 77.28; mid= 76.18
I thought the dollar had found a bottom. since the weekly chart is forming a morning star pattern that may be right. Considering QE2 is nearing its shelf life and Congress has problems with deficit reduction the dollar finding a bottom may be a mirage.
I'd do another chart but my medication has me knocked out.
Details of the Obama Plan to reduce the deficit...
24 comments:
AR,
GWS~!
AAIP
So El-Erian was on CNBS this morning... Doing the basic song and dance... Santelli comes up with a pretty good rant about how the "tax rate" changes proposed are pretty ridiculous (considering that "corporations" represent a very low proportion of the tax revenue base because they find loopholes and hide profits offshore)...
Anyway - the end is classic... Joe Kernen says to El-Erian... "OK so we have 5 seconds left, can you give us your thoughts on Japan & the Middle East?"...
Said in jest... But ain't it the truth?
Don't you love it when gold and silver hold their own even when the market goes into decline. Yen swiss franc. kiwi, and aussie currencies are acting like the new safe havens.
@AmenRa
"I'd do another chart but my medication has me knocked out."
Looks like Biden is on the same medication as you... Either that, or your sleepiness was induced by the teleprompter in chief himself...
All the traders hoping for the overnight ramp are about to have their stops blown to smithereens.
oops... link
http://news.yahoo.com/s/dailycaller/20110413/pl_dailycaller/bidenfallsasleepduringobamapressconferenceondeficitreduction_1
Here's what Americans think about the idea of Austerity...
CV
I do the charts at night before crashing. I'd forgot that particular medication induces drowsiness. I was rushing to get the DXY chart finished as my eyes kept trying to shut.
Don't you love it when gold and silver hold their own even when the market goes into decline
Can't imagine why... I needed a snowshovel to clear path out of my driveway this morning because these barbaric relics were littered all over the place...
@Amen
Yeoman's work... (or are you sure that it wasn't just a case of the fact that it was, in fact, a DXY chart...
Try an experiment... Just post SILVER charts... They're probably more exciting to look at...
CV
Now that's funny LMAO. An old school politician would've laid out on the floor.
New foto in thread...
Time for all of those SPY 130 call option holders to take profit or else.
Have to imagine some psychological support at 1300.
Bon Janjuah lays out his thesis here... (Note: basically dominated by the discussion of QE2 lapse, and/or QE3 - I don't see any mention in there of traders with their TD Ameritrade accounts firing off the trade with their pattern recognition software)...
http://www.zerohedge.com/article/bob-janjuah-picking-your-poison-1350-top-sp-or-qe3-change-fx-regime-and-surge-gold
1. In the soft landing scenario, where we expect voluntary global policy tightening, driven by EM, we would expect 1350 S&P to act as a ceiling, and this sell-off to end with a 20% fall (from the February) peak to (the end-Q2) trough. Such a sell-off would in our view create a very positive TACTICAL buying opportunity for risk, as it would be the ideal “pause that refreshes” and would take the pressure off global commodity prices, the building global inflation risks, stretched risk asset valuations, and reduce the pressure on rising bond yields in DM.
2. Under the hard landing scenario we would expect global policymakers to make even more policy mistakes by failing to tighten, and even more worryingly, by accommodating price shocks, especially in EM. Under this scenario we would expect the 1220 support level to hold for the S&P in Q2 2011, and we would look instead for another melt-up in risk assets over Q2 2011, with the S&P peaking at 1400/1440 by end-Q2. This then would be followed by a very difficult and bearish H2 2011 for risk, as the melt-up in commodities, valuations, expectations, sentiment, inflation, positioning and bond yields would together give the perfect backdrop for a severe hard landing in risk assets. Key here is that QE3 would be delayed until late 2011/early 2012 because of the extremely negative impact that the Fed’s QE2 has had on inflation (globally) and the significant concerns already building about the Fed’s credibility. We think QE3 is still likely, but judge that risk asset markets and the US economy (notably unemployment) will have to worsen considerably before the Fed can make a “credible” case and garner consensus support for QE3. Our view is that over H2 2011, under the hard landing scenario things will get a lot worse. It seems to us that very large amounts of debt and money printing are being used to “buy” a recovery which itself has no real legs (in particular as EM – the BICs – are forced to slow because of their domestic inflation, thus stopping dead the global manufacturing super-cycle which is the only real source of strong growth in the US). And once QE2 stops and other such stimuli are also turned off (fiscal boosts have already had their day, in our view) we think the emperor?s new clothes will be revealed for what they are. Although in this hard landing scenario, in the initial melt-up we think the S&P 500 could reach 1400/1440 by end-Q2, by end-2011 it could be below 1000.
All the evidence of the past few weeks points to the “melt-up then hard landing” path as being the most likely, although for now 1220 and 1350 are still holding, so we still see some hope – albeit diminishing rapidly – for the soft landing outcome. To reiterate, four consecutive S&P 500 closes above 1350 would to us signal the melt-up (1400/1440 S&P 500 by end Q2 2011), to be followed by the hard landing in H2 2011 (1000/sub-1000 S&P 500). Equally, if 1350 provides resistance and the S&P 500 trades below 1220 on four consecutive closes, then in this soft landing path we would expect to see low-1000s on the S&P 500 by end-Q2 2011. The big difference is that under the soft landing path, we would be buyers (tactically, into year-end) of the S&P 500 in the mid-1000s, expecting a bounce back to the 1300s by year-end. Under the hard landing path, a 1000 – even a sub-1000 – S&P 500 would likely not entice us back into high beta DM risk, even tactically, let alone on a secular basis.
The money (pun intended) shot...
" We find it extremely worrying that over the mid-February to mid-March global equity sell-off, where the drivers of the sell-off were not particularly US-centric, the US dollar nonetheless sold off over this period. This is the exact opposite of what has been seen for more than the past two years, and not what the market expected."
Interesting, I kind of like the melt up and hard landing path for the following reasons:
1. Some positive earnings surprises ahead.
2. Rates/yields are low in the US. Credit is still strong.
3. Banks will want to see higher long bond yields before they bail.
4. Once they bail, HFs will drive the market lower on carry unwind.
5. If the DXY ever does rally it will get very very messy.
I am in this camp now b/c this is like 2008, they are going to wring the last few drops out of this and suck JOHN E in before they pull the plug.
@LB
At some point the DXY has to rally (as I'm sure we all know)...
The brazillion dollar question is... When & where?
That's why I favor the "Melt up & Hard Landing" path as well... (well - not that I FAVOR it - just saying it seems tilted in that direction)...
It just seems to be that here, with a 74 handle, the DXY has to see the abyss... I'm pretty sure there are some VERY LONG TERM technical analysts that are very curious as to what happens there...
I see it this way...
Just about EVERYONE says that "under 70" it goes into FREEFALL and the "hyperinflationary endgame" is triggered...
In fact... That's where everyone might get fooled... If there's ANYTHING left in the bag of tricks, it could be used at that juncture (same way as the other things were used in '08)...
Not that it really matters... But it would solve one problem... It would appear to SAVE the dollar after what appeared to have been the EVENT HORIZON being crossed...
My guess is, after that, there would be no "long term" flight back to the dollar (but surely a decent rally)...
In any case, the RESULT would be that the dollar decimation project would have bought itself a new glidepath...
And, of course, WITH that, it would have bought more time...
How ironic it would be at that time if some Fed lever pulling at that time actually appeared to have SAVED the dollar (which of course it didn't - but people don't have the attention span to see that far ahead)...
My 2 cents
It just seems to be that here, with a 74 handle, the DXY has to see the abyss... I'm pretty sure there are some VERY LONG TERM technical analysts that are very curious as to what happens there...
In a way... It's not unlike the Euro (remember last May)... Crossing under the technically important level of 1.29 (which I called to the day)...
When it was at 1.18... Everybody was calling for the end of the Euro...
OOPS...
Silver...
Jesus Tapdancin' Christ!
We will see alternating "collapses" of USD, EUR and JPY for many years.
It is our turn right now but it will turn around before long.
Right now is the best time to just sit back and watch. Wait until a direction is established. Both call and put options get killed on days like this.
http://www.telegraph.co.uk/finance/comment/jeremy-warner/8451843/Who-will-save-America-from-drowning-in-debt.html
Yet today’s borrowing is quite different from the type that has fed the debt mountains of the past. When the country was still young and filled with hope, it borrowed repeatedly and liberally from Europe to finance its railroads and other forms of infrastructure investment. The gamble paid off big time. But today, the debt is to fund private and government consumption. It’s just money down the drain.
The IMF has calculated that to bring public debt back onto a sustainable footing will require a fiscal adjustment over the next 10 years in terms of spending cuts and tax rises equivalent to a jaw-dropping 17.5 per cent of GDP. That dwarfs even the scale of the challenge faced by the UK, and America’s bipolar political system may make it impossible for agreement on such a consolidation to be reached.
Eventually, there will be an outright fiscal calamity in the US, and from that a leader will emerge with the wherewithal to lead the country back from the brink. Looking around the Washington scene today, though, it’s hard to see where that person will come from. Modern democracies seem to have become too compromised to produce saviours.
"Right now is the best time to just sit back and watch. Wait until a direction is established."
My thoughts exactly. That's what we did. Jack. Still fading the recent enthusiasm for Treasuries.
No Bond Report today, not enough action for our intrepid observer - unless you like watching paint dry.
I will put this up and then retire to a safe distance, CV and AR, while you rip his head off:
http://blogs.marketwatch.com/cody/2011/04/14/gold-is-dead-long-live-the-commodity-trade/?mod=yahoo_hs
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