Featured Posts (1441)
Sort by
On the Daily notice the spacing between the 20 and 50ma, also the euro usd is below all the Moving averages which is a bearish sign, watch the 1.2796 area for support as it is the 61.8 fib retrace, Notice the 1hr chart, this is the daily overlayed on it and shows the same H and S Pattern
Any Comments or views would be appreciated
Either someone in China is pumping out 100 capesize ships every singleday, and doing their best to push charter rates to just below zero, or,gasp, transpacific trade is really falling off a cliff (i.e., Chineseinventory accumulation has been put on hold). Of course, if it is thesecond, we will know in February when China reports its January tradesurplus (and the US respectively reports its trade deficit). Should thegross imports and exports number plunge, it may confirm that the BDIYwhich is only mentioned by the MSM when rising, and ignored whenplunging, may actually be relevant. And speaking of plunging, today itdropped for the third consecutive day by more than 4%, hitting 1,544, a4.8% drop overnight, and the lowest number since April 2009.
Tyler Durden has been pounding on the Baltic Dry Index plunge story. Here, here and here. I’m fascinated by this. Shipping is the backbone of global trade. So when a big index like this makes a big move in a short period of time there is almost always a message. But what message? One could easily read the drop in BDIY as a warning sign of a slowdown in global trade. Virtually every other barometer is pointing up. With that in mind, I ask the question; Is the BDIY an outlier, or should we be paying attention to what it is saying?
I called a friend in Athens who is in the shipping business. On the question, “Why the drop” I got the murky answer, “It’s a lotta things all at once”. Some specifics he mentioned:
-The floods in Australia have tied up ports and cargos. Therefore there are many ships looking for a load while the country dries out. This puts downward pressure on the BDIY. This is a short-term phenomenon.
-Many new ships have come into service in the past 18 months. This is part of the boom bust cycle in new construction/shipping rates. His words, “There is no shortage of ships today, prices look soft.”
So we have both long and a short-term factors weighing on the BDIY. The short term one is going away, a possible conclusion is we see a bounce in the index soon. On this type of thinking I got this response:
-Maybe, maybe not. The biggest driver in shipping is China. They have been importing all manner of raw materials and finished goods for two years on a massive scale. That trend has slowed markedly in just the past sixty-days. There is no indication that it will resume at anytime soon.
I ask, “Of the three things weighing on the BDIY which is most important?” Answer:
-China trumps everything. It's not just shipping rates; all the froth in the commodities market is at risk.
This is of course just one mans opinion. Who knows, maybe China will ramp up its infrastructure development again sometime soon. But given that they are going hell bent for leather in the opposite direction to cool an overheated economy I would suggest that a revival of their build-out program is the least likely thing we might see.
There are two basic trades. The Growth Trade and the No Growth Trade. In many areas of the markets (stocks, commodities, currencies and to some extent bonds) the Growth Trade is fully priced in at the moment. When (if) more evidence of a China slowdown comes out it is possible that a fair bit of “air” will have to be released. Nothing like that is in today's 'print'.
This pattern is an indication of a financial instrument's SHORT-TERM outlook.
The name "Hanging Man" is used because it has a gloomy connotation, and also because the candlestick that defines this pattern looks like a hanging man with dangling legs. The Hanging Man pattern is characterized by a small Real Body near the top of the price range. The Real Body can be black or white, although a black candlestick is preferable. A black candlestick is slightly more bearish since it shows that the close could not get back up to the opening price level. The Hanging Man has a long lower shadow that should be at least twice the length of the Real Body. The upper shadow should be very small or non-existant.
Trading Considerations
In cases where a major uptrend exists followed by a Hanging Man, the investor should consider vacating long positions.
top
Criteria that Supports
A Hanging Man can be confirmed by a bearish gap between the Real Body of the Hanging Man and the open on the next session. In other words, the investor should look for the next session opening lower than the Real Body of the Hanging Man. The greater the gap, the stronger the signal.
A Hanging Man may be a stronger signal if the subsequent session shows a black Real Body with a close lower than the close of the Hanging Man.
A Hanging Man may be a stronger signal if it is followed by another, well-formed Hanging Man in the next session.
The longer the Lower Shadow of the Hanging Man the greater the significance of the pattern.
The smaller the Real Body and the Upper Shadow the more significant the pattern.
top
Criteria that Refutes
It is important to view signals in the context of prior price action. If the uptrend is strong and there are major bullish indicators before the Hanging Man, then perhaps the bullish momentum is overwhelming and the Hanging Man won't work. In such cases it is wise to wait for bearish confirmation before acting.
The uptrend may still be in force if the next session opens higher than the Real Body of the Hanging Man.
A Hanging Man with a white Real Body (where the close is higher than the open) may indicate weakness in the pattern.
This is the chart they don't want you to see: the purchasing power of the dollar over the past 76 years has declined by 94%. And based on current monetary and fiscal policy, we have at least another 94% to go. The only question is whether this will be achieved in 76 months this time.
May 08, 2009
Oil is getting hammered today. The United States Oil Fund LP (NYSE:USO) is trading at $38.03, -1.02 (-2.61%). While oil is down sharply, Chevron Corporation (NYSE:CVX) is trading just slightly lower while Exxon Mobil Corporation (NYSE:XOM) is trading at $74.93, +0.38 (+0.51%), solidly higher. Many amateur investors would look at this as a bullish sign for both stocks but I beg to disagree. The beginning of the year always sees new money flowing into the biggest stocks and the best winners. The fact that both these stocks are strong in relation to oil is only due to the fact that new money is looking for a home. This new money is propping both stocks up for the time being. It should subside by tomorrow and if oil continues to be weak, look for further downside action. Both XOM and CVX are extremely extended on their charts and both due for a pull back as well. Look for a solid pull back on both in the coming weeks. To gain more insight and analysis, direct entries and exits and master education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
When we noted last night that there was a Baltic fat finger index, we thought we were joking.Appears not.At it's lowest since 2009.The BDIY has plunged by 4.5% overnight from 1,773 to 1,693,
easily the biggest one day drop in a long time. And, more importantly,
the index has just taken out the 2010 lows hit on July 15, when the BDIY
last traded at 1,700. So in a normal world, one could argue, the fact
that there no demand for shipping may actually indicate something.
However, in this bizarro "5 year plan" politburo reality, this will
likely result in futures once again surging as QE4.5 starts getting
priced in.
