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This must be one of the questions that confound people who believe deflation is coming. I am not one of them, as I look at the 3-year weekly chart of crude oil.The chart looks very bullish. On a weekly chart, exponential moving averages (13-EMA and 34-EMA) seem to work well; their crossovers seem to indicate a new trend well. The crossovers of these moving averages also coincides with very slow stochastics (60, 3) crossing 50.Right now, 13-EMA is just about to cross above 34-EMA, and both EMAs are turning UPWARD. RSI looks well supported at the trend line. I don't like slow stochastics still very far from 50 and turning down slightly, but since this is a weekly chart I'm willing to give it several more weeks.Besides, the formation since the last EMA crossover (September 2008) looks like a cup and handle, with the handle forming above 50% (barely, but still above) retracement from the bottom to the price immediately before it started to tank in earnest.If this formation breaks out of the handle, the target price would be the handle high ($73.90) plus the depth of the cup ($38.77), which will take the crude oil to $112.67, a 69% increase from today's close at $66.73.With dismal news all around us again, this number looks literally fantastic (i.e. that which exists only in fantasy). Or crude oil price movement is telling us it is inflation, not deflation, that's coming our way
Yen reached their highs for the past two weeks, after the emergence of that economic statistics in Japan had fallen short of expectations, and regulatory authorities in the United States closed the five banks. As a result, investors started to close long positions in the yen crosses from within the traditional flight from risk. The most significant Japanese currency strengthened against the Norwegian krone and the Australian dollar. The negative trend in equity markets also contributed to the denial of risk transactions. "It is clear that the currency markets following the stock indexes," - note the dealers. "When stocks are falling, people are buying yen." However, at present euro / yen was confronted with a demand of 132.80, following a breakthrough will result in the movement to the base of the cloud Ishimoku at 132.50.Soglasno average forecast in a three-month dollar / yen could reach the level of 100.75, while euro / yen - 136 .
The British currency remained under pressure across the whole spectrum of the market, while paired with yen this helps the overall strengthening of the latter against the backdrop of rising tensions in the equity markets, and now the pound / yen traded around Y154.39. Bulls managed to find support around Y154.20, but currency strategi Nordea sees risks preserving the dynamics of a pair of negative and point out that growth is now trying to use to find opportunities for sales. The bank previously opened a short position of the foot, at Y155.63 from Y160.50, and the original intent of the area Y148.00.
While reading a recent CNBC article about current events something clicked for me.Here is the passage:
The dollar rose broadly on Thursday as yields on 10-year U.S. government bonds jumped more than 50 basis points in the last two weeks, drawing Japanese investors into overseas assets like global semi-conductor stocks, banks and U.S. junk bonds, according to Reuters.Do you remember the massive unwinds that occurred during the past year? Do you remember all the talk about money heading towards Japan due to risk aversion?Pay attention, this is significant. It's also backs up my much touted long term notion that carry trade currency pairs are in for a recovery.Given the quote above what do you think will happen once the jobs numbers start to turn around in the US economy? I'll tell you what I think. I think interest rates and yields will start to rise. What do you think all that money sitting in Japan will do if there is a hot US economy paying good yields? I suspect that it will leave Japan in order to earn good returns.Guess what that will do to the Yen? That's right, it will drop like a stone. When that happens you'll see carry trading pairs rise massively.Okay, I realize this may be a year to two away, but as long as we do eventually get a worldwide economic stabilization this is what is in store for us. Anyway, if you are a rookie, be careful, as you can't simply make long term bets willy-nilly. The market can always move against future expectations long enough to blow up your account and it often does so as soon as you throw caution to the wind.What this means for me is that I may be more willing to accumulate carry trade positions at moments of opportunity. Keep an eye out for fundamentals and watch leading economic indicators such as the Baltic Dry Index or the price of copper.As you can see these indexes are rising. However, they are still at historically low levels. Are we just in a bounce with respect to worldwide economic activity or are we simply coming up from a recent bottom? You decide.
The dollar rose broadly on Thursday as yields on 10-year U.S. government bonds jumped more than 50 basis points in the last two weeks, drawing Japanese investors into overseas assets like global semi-conductor stocks, banks and U.S. junk bonds, according to Reuters.Do you remember the massive unwinds that occurred during the past year? Do you remember all the talk about money heading towards Japan due to risk aversion?Pay attention, this is significant. It's also backs up my much touted long term notion that carry trade currency pairs are in for a recovery.Given the quote above what do you think will happen once the jobs numbers start to turn around in the US economy? I'll tell you what I think. I think interest rates and yields will start to rise. What do you think all that money sitting in Japan will do if there is a hot US economy paying good yields? I suspect that it will leave Japan in order to earn good returns.Guess what that will do to the Yen? That's right, it will drop like a stone. When that happens you'll see carry trading pairs rise massively.Okay, I realize this may be a year to two away, but as long as we do eventually get a worldwide economic stabilization this is what is in store for us. Anyway, if you are a rookie, be careful, as you can't simply make long term bets willy-nilly. The market can always move against future expectations long enough to blow up your account and it often does so as soon as you throw caution to the wind.What this means for me is that I may be more willing to accumulate carry trade positions at moments of opportunity. Keep an eye out for fundamentals and watch leading economic indicators such as the Baltic Dry Index or the price of copper.As you can see these indexes are rising. However, they are still at historically low levels. Are we just in a bounce with respect to worldwide economic activity or are we simply coming up from a recent bottom? You decide.
QMan at Tickerville reminds you to trade the traders, not the macro fundamentals...
Here's the weekend Tape Talk.Some of the sectors he thinks attractive happen to coincide with mine. Specifically, he seems to be looking at sectors which have been dismissed or neglected by traders: commercial real estate (people just want to short), financials, commodities (industrial metals, oil, but NOT ag). He likes retail, too. NOT because of fundamental reasons but market psychology (i.e. other traders).If you haven't noticed, in this 2-week rally, commercial real estate and financials didn't materially participate. Check the charts of ETFs - IYR for commercial real estate, and XLF for financials. They basically went sideways.I have NRO (commercial real estate) and FAS (financial 3x long), and I've been sitting on MTL (iron ore) and DXO (oil). I hope Qman's right.In the video, he said one interesting thing. He said the bearish patterns like head and shoulders ended up breaking to the upside, instead of down. Maybe that's a sign of a bull rally. Or maybe it's because of High Frequency Trading feeding frenzy...If this rally has more legs, "everything will go up, at least initially", according to Quint. I agree. Just know when to quit. (If that's easy....) Whatever will be, will be
Here's the weekend Tape Talk.Some of the sectors he thinks attractive happen to coincide with mine. Specifically, he seems to be looking at sectors which have been dismissed or neglected by traders: commercial real estate (people just want to short), financials, commodities (industrial metals, oil, but NOT ag). He likes retail, too. NOT because of fundamental reasons but market psychology (i.e. other traders).If you haven't noticed, in this 2-week rally, commercial real estate and financials didn't materially participate. Check the charts of ETFs - IYR for commercial real estate, and XLF for financials. They basically went sideways.I have NRO (commercial real estate) and FAS (financial 3x long), and I've been sitting on MTL (iron ore) and DXO (oil). I hope Qman's right.In the video, he said one interesting thing. He said the bearish patterns like head and shoulders ended up breaking to the upside, instead of down. Maybe that's a sign of a bull rally. Or maybe it's because of High Frequency Trading feeding frenzy...If this rally has more legs, "everything will go up, at least initially", according to Quint. I agree. Just know when to quit. (If that's easy....) Whatever will be, will be
Major indices ended the day in red, although S&P 500 momentarily popped into green. But that didn't deter financials, and particularly those financials whose share prices have been reduced to bit sizes in the past year. If you owned any of these stocks, congratulations! (I hope you bought them in the past 4 months, though.)
Those of you who held on to FRE (and FNM to an extent) despite a dump on Friday, congratulations again.FRE (Freddie Mac) had the most violent 5 trading-days since it was virtually nationalized in September last year. Monday's jump was due to the earning report AH on Friday last week (FRE made profit, for a change), but the stock kept going up AH Monday and ended at $1.81, 200% up (or triple) from Tuesday last week.Freddie and sister Fannie are practically bankrupt. And yes, there's an encouraging (I suppose) talk of setting up an entity to absorb Freddie and Fannie's bad assets. But this is just a talk at this point. I have no idea where FRE or FNM will go from here. Their longer-term charts don't mean much, because, as I have just said, they are practically bankrupt and technical analysis means nothing.Retail investors who are holding FRE and/or FNM are irrationally and extremely bullish, saying their stocks will go to $5. That sounds wild, but FRE was indeed $5 one year ago
The Baltic Dry Index, which tracks shipping costs and is viewed as leading indicator for commodity prices, has had its worst week since the peak of the financial crisis last October, as Chinese demand slowed."The index fell from 3,350 to 2,772 this week – a fall of 17.2pc - as imports of iron ore and coal slowed down. The index is now 35pc lower than its 2009 high, hit on June 3."Earlier this week Ian Ashby, head of iron ore at miner BHP Billiton, said at the Diggers & Dealers conference in Australia that Chinese restocking of iron ore was at an end."Mr Ashby said that supplies at the country's ports were enough to sustain a month of consumption."However, some believe that imports have slowed down as Chinese steel mills are still locked in talks over the pricing of iron ore imports over the next 12 months."Hmmm.. I still have MTL, a Russian iron ore company, which seems to be stalling at $12. It passed that point in June, only to head back down, and back up again and headed back again in early August. I still don't see anything technical wrong with the stock, but with the macro information like Baltic Dry Index and Chinese hoarding to end, I'd better be careful, and not be too greedy.
