The West would like China to revalue its currency, instead, Beijing is tightening monetary policy. Following last weeks bond yields rise and todays decision to raise the reserve requirements by 50%, global risk appetite is being dampened, especially as JPY firms up against major currencies, followed by the USD. GBPUSDs downside was limited at $1.6065, missing our $1.6045 target and recovering after stronger than expected UK BRC sales figures and international trade figures. Cable is expected to remain limited at $1.6235-40 as USD stability emerges on uncertain risk appetite. Gold drops below $1,140 after failing $1,170, eyeing interim trend lime of 1,135, a break of which could lead to 1,100.
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A BULLISH GAP DOWN CHART IN THE VIX ? http://chart.ly/94xpw7 started off with a deep gap down (open well below prev close) but also ended higher. The last time this occurred was in Aug 2008, but we also witnessed similar occurrences yet not quite gap downs (as seen in chart). Today marks the official kickoff with US earnings season, with Alcoa showing narrower loss but missing Wall St estimates. A potential snapback in VIX this week would be USD-positive at the detriment of equities. When all said done today, USD Index remained well above its 76.20 support (closed at 77.01), while gold struggles to hold above 1,150. Watch out for more signs of creeping USD strength such as short-lived rebounds in EURUSD, GBPUSD & gold. DO NOT GIVE UP & ROCK THE VOTE AT THE SHORTY AWARDS http://shortyawards.com/alaidi WE CAN DO IT !
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INTERMARKET SUPPORT FOR USD. The US 1- year yield hodls foundation at 3.75% (USD support), GOLD capped at 1,168 (61.8% retracement), EURUSD capped at that 1.4590 resistance and FINALLY USD INDEX remains well bid up above 76.25which is near the twin moving averages (50 & 100 day). USDJOY did break below 92.20 but will it close the NY session below it. next support stands at 91.30. Magnitude, aside, USDJTY has not closed lower for 3 consec. days since early Dec. Cable still capped at $1.6220, followed by $1.63.
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By Nicholas Santiago on January 11th, 2010 1:04pm Eastern Time
On December 11, 2009 spot crude was trading around the 71.00 level. The Christmas shopping season was underway at that time and the lower gas and fuel prices had helped to make the consumer jolly. Perhaps the extra money in the pocketbook helped to buy a little more for the holidays. In any case it always feels a little better when you can save at the gas pump. Since that time oil has rallied above $82.00 a barrel. People who started to feel jolly are now saying to themselves what did I do? Why did I spend that extra cash on a gift that really wasn't needed? This is the psychology that goes through peoples mind when they see the price of oil going up.
Recently the weather in the United States has been a major factor. A severe cold front has swept the nation from New York to Florida. States such as Nevada and Texas have experienced major cold temperatures. I have read that every time a person uses the heat in Florida it costs them an average of $10.00 a day more in energy costs because the systems are generally built to cool their homes and are not efficient when using heat. This is a direct tax on the American consumer.
Here is the big problem. Currently unemployment in the U.S. is about 10 percent by government standards. Many people are still trying too catch up or recover from the financial crisis last year. If unemployment is actually higher the higher energy price is simply a burden and a direct tax on the U.S. consumer. Can America handle oil prices above $80.00? In July 2008 when oil traded at 147.00 a barrel this was one of the major catalysts that broke the back of the market.
There are a few ways to play oil using ETF's. One way is to trade the U.S. Oil Fund ETF(NYSE:USO) which is trading slightly lower on the day. This ETF does look to be into resistance levels on the daily chart. Oil can also traded by using the leveraged ETF's such as Ultra DJ-AIG Crude ProShares(NYSE:UCO) which is two times long crude. The two times short crude ETF is UltraShort DJ-AIG Crude Oil ProShares(NYSE:SCO).
Nicholas Santiago,
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
Fundamentals are finally catching up to the U.S. dollar with foreign investors bailing out of the greenback following Friday's abysmal non-farm payrolls report. An improvement in risk appetite is contributing to the rally in the euro and other high yielding currencies but the positive sentiment once again stems from China and not the U.S.. As our colleague Boris Schlossberg reported this morning, Chinese exports surged 17.7 percent last month, pushing China above Germany as the world's largest exporter. With no U.S. economic data on the calendar this morning, the EUR/USD should hold onto its gains. On Friday, we talked about how a breakout in the currency pair was imminent and now that it has materialized, there is scope for a further move higher. However in order for a new trend to emerge in the EUR/USD, the currency pair needs to break above its key resistance level of 1.4690 (the 50 and 100 SMA).
Oil Prices Hit 15 Month Highs
The weakness of the dollar has driven oil prices to 15 month highs above $83 a barrel and gold prices up more than $20 an ounce. This is particularly important because it is inflation week in the foreign exchange market with many countries releasing their consumer price reports. Oil prices have risen 6.75 percent since the beginning of December but from last month's lows, it increased close to 20 percent. The following chart illustrates the relationship between crude and U.S. CPI. As you can see, the higher crude prices rise, the stronger the inflationary pressures. As central banks start to consider exit strategies, persistent inflation could force them to tighten monetary policy earlier than they would otherwise like. Therefore even though job losses in the U.S. increased last month, if the trend continues to improve and oil prices continue to rise, the Fed could still raise interest rates in the third quarter - which would help the dollar recover. In the meantime, keep an eye on the Beige Book which is due for release on Wednesday to see if any of the Fed districts are report price pressures.
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By Nicholas Santiago on January 11th, 2010 1:04pm Eastern Time
On December 11, 2009 spot crude was trading around the 71.00 level. The Christmas shopping season was underway at that time and the lower gas and fuel prices had helped to make the consumer jolly. Perhaps the extra money in the pocketbook helped to buy a little more for the holidays. In any case it always feels a little better when you can save at the gas pump. Since that time oil has rallied above $82.00 a barrel. People who started to feel jolly are now saying to themselves what did I do? Why did I spend that extra cash on a gift that really wasn't needed? This is the psychology that goes through peoples mind when they see the price of oil going up.
Recently the weather in the United States has been a major factor. A severe cold front has swept the nation from New York to Florida. States such as Nevada and Texas have experienced major cold temperatures. I have read that every time a person uses the heat in Florida it costs them an average of $10.00 a day more in energy costs because the systems are generally built to cool their homes and are not efficient when using heat. This is a direct tax on the American consumer.
Here is the big problem. Currently unemployment in the U.S. is about 10 percent by government standards. Many people are still trying too catch up or recover from the financial crisis last year. If unemployment is actually higher the higher energy price is simply a burden and a direct tax on the U.S. consumer. Can America handle oil prices above $80.00? In July 2008 when oil traded at 147.00 a barrel this was one of the major catalysts that broke the back of the market.
There are a few ways to play oil using ETF's. One way is to trade the U.S. Oil Fund ETF(NYSE:USO) which is trading slightly lower on the day. This ETF does look to be into resistance levels on the daily chart. Oil can also traded by using the leveraged ETF's such as Ultra DJ-AIG Crude ProShares(NYSE:UCO) which is two times long crude. The two times short crude ETF is UltraShort DJ-AIG Crude Oil ProShares(NYSE:SCO).
Nicholas Santiago,
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
My smaller time frame charts tend to be a little messy but this conclusion seems clear enough.As we saw on daily chart previously, the FTSE broke out and gained manically from before xmas, right now it seems top of that channel
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The USO(U.S.oil ETF) climbed higher again this week recapturing the important 40.00 level. The USO is at weekly resistance, however, it cannot be ruled out that the USO may trade into the 43.00 level if it clears 42.00 high made in October 2009. It is also important to remember that oil is very sensitive to adverse weather, geopolitical events, and the U.S. Dollar.
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The GLD(gold ETF) moved higher this week after pulling back for over a month. Technically this chart is still in an uptrend and very strong. There will be weekly resistance at the 120.00 level should it get back up there. It is also very important to keep an eye on the U.S. Dollar as gold and the dollar generally trade inverse to each other.
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The U.S. Dollar index pulled back this after hitting the important 78.00 resistance level. It is possible that the dollar is beginning to consolidate after a strong rally into mid-December. Should consolidation take place the dollar could trade into the 80.00 level. Remember the stronger dollar generally impacts commodities and most inflationary stocks negatively and vice versa. Should the dollar decline there will be weekly support at 76.50.
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The SPX started the first week of the year by moving higher again. While the overall volume in this broad based index remains very light the price continues to climb. There will be some weekly resistance at the 1150 area. However, the 200 moving average is in sight on the charts at the 1235 level. The SPX has not had a single 10 percent correction since the market rally began in March 2009.
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As some of you may know, I am hugely bearish on the world economy.My views are pretty much Libertarian/Austrian Economics based.I believe that government intervention, reckless monetary policy and massive debt accumulation has created this fake "prosperity" we have been seeing over the past 15 years or so....Take a look at this chart:
I am adding NO Elliott Waves or anything else...But from a purely basic technical perspective...what do you think?A Channel...A shoot above it...back into it...and a retest of the top of it?Also notice the possible Head and Shoulders pattern we are seeing develop...Where do we look to be heading?My Conclusion:The Great Depression was a Blip compared to what awaits us. :(
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