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Markets in a Nutshell - April 2009

April 24, 2009

I. Currencies:

  • The South African Rand is heavy as it starts to become overbought. As usual the Rand is stronger against the Dollar than it is against the Euro. Note that the Rand is now also accepted in Zimbabwe and used instead of the worthless ZimDollar.

  • The British Pound is oversold. Today, with the economic outlook Britain has and after a de facto 30% devaluation of the Pound, few people care. The damage has been done.

  • The Japanese Yen and the Swiss Franc have bumped off their UPTREND and are strengthening against both the Dollar and the Euro.

  • The Aussie needs to confirm its breakout point against the Euro. 

II. Bond markets:

Nice slide of Bonds...we told you on many occasions one has to stay away as Bonds are at historic high levels and will be the next bubble to burst. Authorities can try to manipulate Interest rates (and bonds) but in the long run, the forces of nature always win. The coming Tsunami will (with the exponential increase of Government financial needs due to the depression) will be one of exponentially rising Interest rates. I don't even want to think how this will affect the Bond markets but also Real Estate.

III. World Stock markets: End of the first up leg A of the ABC bear market correction.

We are early with this. But better be early and safe than late and sorry. Markets can stay strong for a couple of more weeks...maybe until the end of May, beginning of June.

IV. Commodities:

Most commodity indexes are still in a Reversal/accumulation mode and have to break out. So far, only Copper smelled the upcoming hyperinflation.

V. Gold, Silver, Platinum and Gold and Silver mines:

  • Last week Gold and Silver were quoted with a Question mark. During the week, however the questions were answered and BUY SIGNALS confirmed.

  • Gold and Silver mines and indexes (HUI, XAU) are becoming very bullish too.

VI. Oil and Oil Service:

Whatever is said about Oil and Oil stocks, the trend is UP!

April 18, 2009

Generally speaking, we are in the eye of the storm. Be aware that the worst has yet to come. Time to stop listening to the Authorities and Banks who did not see it come in the fist place (if they did, we have premeditated theft) and who propagate their views (All is well Madame la Marquise) using the mass media (television, written press).

  • The Dollar was fairly strong this past week but ended it with a 'shaven head' on the candle charts indicating a sell mode. Also the Indicators are 'the sell zone'.

  • Commodity currencies like the Aussie and the South African Rand will be strong for another week.

  • The indicators for the Euro sit in their  Buy zone. A triangle formation indicates we may see some unexpected move over the coming week(s).

II. Bond markets:

Bonds are still expensive, dangerous and keep slipping off their tops. Still a NO GO. It does not matter whether there are corporate or Government bonds: Indicators indicate further weakness. This is confirmed by the Utility index. On the point and figure chart, the latter has just ran into its former break down point!

III. World Stock markets: End of the first up leg A of the ABC bear market correction.

  • The Austrian market is overbought and short time, the Indicators advise to sell. The same is true for the German DAX, the Nikkei, Swiss SMI, .... ;The Footsie (UK) has still some room for upward scope.

  • The American stock markets and their indexes (Dow Jones, Composite, S&P500, Transportation,...)show similar characteristics. The A leg looks dramatic with huge sustaining volume.

  • The SSEC (Shanghai) moving averages show a Golden Cross. But also here, a correction is plausible.

IV. Commodities:

Copper is now bumping into its 200 day Moving Average and the odds are that its rise will slow down and we may be ready for some price correction.

V. Gold, Silver and Platinum:

  • Gold is still uncertain. Daily Stochastic are bullish. Weekly Stochastic still need to come down before it also reaches the Buy zone. Gold expressed in non-dollar currencies is falling back from the Top to the Bottom of the uptrend channel. The action is accelerated for Gold expressed in currencies like the Aussie and the Rand. The majestic Reversed Head and Shoulders is still valid. Several charts (Gold in $, Gold in ¥, Gold in Swiss franc,...) show small Up Flags. A lot of action is happening under the support of the 200 day Moving Average.

  • Platinum was strong.

  • Similar conditions as for Gold apply for the Gold Indexes as the HUI, XAU,...

  • $-Silver also shows an up flag and a Golden Cross on its moving averages. Expressed in euro it is now testing the break through the down trend which resulted from the 2008 correction.

VI. Oil and Oil Service:

  • Oil service stocks have broken out of their reversal/accumulation formation. Indicators indicate we are coming close to a short term correction.

  • Crude Oil is still strong and indicators are not oversold yet. This indicates that we may see further upward movement this coming week.

April 7, 2009 - a random walk down Wall Street

 

Amazing is that all charts look amazingly similar. They are the life proof that we have global financial markets and that the 2008-09 crash was the very result of Fractional Reserve banking and the creation of fiat money out of thin air which resulted into bubbles that are in a process of deflating.

 

I. World stock markets have bounced off what can be a potential long term bottom but are entering a resistance zone and closing in on their 200 day Moving Average. Extremely high volumes make this bounce significant. Stochastics also indicate we are at least to see a small correction/consolidation. As a whole, we had a nice up leg but there are few birds making this 2009 Spring!

  •  Expect the Dow Jones to run into resistance as it closes in on the 8,500 – 9,000 level. 

  • A similar statement can be made for the Dow Jones Utility Index, Dow Jones Transportation and REIT indexes (bumping into its secular bear market trend lines), Nasdaq Composite (huge double bottom?), Nikkei. The Footsie (London), Dax (Germany), SMI (Swiss), CAC (France) have broken through its 50 day Moving Average and are bumping into their downtrend line on the Points and Figure chart. Other markets have reversed course but being weaker they are not bumping into their down trend lines: ATX (Austria), IBEX (Spain), MIBTEL (Italy),

  • Some indexes as the Dynamic insurance index have formed reversed Head and Shoulder formations and some indexes have already broken the neckline. 

  • Other indexes as Real Estate have not really participated to the bounce. This is an indication the Real Estate crisis is not over yet.

  • China looks a lot better: with a Golden cross of the Moving Averages on the Shanghai and Shenzhen composite indexes who have also broken the down trend on the points and figure chart.

  • The Russian (RTX) index seems to be breaking out of a falling wedge (bullish).

II. Interest rates are kept artificially low and though the auctions of Government bonds, gilts and treasuries are an absolute disaster, they stay high as the Authorities have found the road towards Quantitative Easing = they buy the bonds, gilts and treasuries.

 III. Currencies:

We have yet to see what the result will be of the HUGE swap agreement which was made between the USA, Europe (ECB) and the UK. There is no doubt it was made in order to stop the deluge we saw on the British Pound and to try to damper the volatibility on the Forex markets.

  • The Dollar shows a HUGE double top against the Euro. The battle is fierce and I expect the FED to do the impossible to see the Dollar maintains its role as Reserve Currency. The Euro has to break the 1,38 level in order to convince the market of its strength. So far it is oscillating between its 50 day and 200 day moving averages ($ 1, 30 and $ 1, 38). If the mother of all necklines does not hold,  the dollar/euro chart will end up with a huge trap.

  • The British Pound has momentarily been rescued by the Swap agreement but the down trend is still intact.

  • The Swiss have tried their best to push down their currency and hereby improving their export position. However they only succeeded in bringing it down to the bottom of the uptrend channel for the Franc against the Euro.  Expressed against Dollars, the Swiss is sitting in a nice UP trend.

  • The Yen is in a process to close the gaps we had over the past months and has bounced into the 200 day Moving Average (support) against the Euro.

  • The South Africa Rand has been steady and is bumping into the falling 200 day moving averages both on the Euro and Dollar charts: the Rand seeks a middle way between the Dollar and the Euro.

 IV. Commodities:

  • The Reuters CRB index still sits in a reversal/accumulation formation.

  • The Agricultural index is building a reversed head and shoulder index. Once it breaks out of it, it will at the same time brake through the down trend line op the charts and the 200 day Moving Average.

  • Crude Oil has broken out of a reversal/accumulation formation and has a price objective of $ 60.

  • Copper has performed extremely well. Not only has it broken out of a accumulation/reversal formation but it has also broken its down trend on the points and figure chart and through the 50 day moving average. (Copper is a leading indicator).

  • Platinum has performed even better and is now bouncing into its 200 day moving average.

V. Banks, brokers and insurance co's

Note: we think this sector is bankrupt and one must simply stay away.

  • The Bank index has recovered off its lows but firmly sits in a DOWN TREND. The Broker index has bumped into its down trend line but has not been able to break it. The indexes are overbought and expect the sector to lead the coming down leg. (The charts of both indexes show an overshoot on the down side).

  • The shares Ambac, Aetna, AMR, AXA, Bank of America, Chase corp., Citigroup, Humana, Ing bank, Countrywide financial, Merrill Lynch, Mitsubishi Financial, Suntrust, UBS, Wachovia, Deutsche bank, Santander, MBIA, Student loan...we all know where they are, but don't want to be there yet!

  • Progressive managed to hold on pretty well.

  • Credit Suisse, Goldman Sachs and Morgan Stanley belong to the better ones (how come?) , but hasn't the latter not managed to survive the Great Depression!?

VI. The Oil Sector

  • Apparently the Oil service sector looks better than the fully integrated: they show a huge accumulation/reversal formation. Some are close to a break through their down trend: Noble drilling and Transocean are a good examples.

  • The oil index shows a double bottom but has yet to break out and reverse trend.

  • Fully integrated (Petrohawk Energy) show similar accumulation/reversal formations. Imperial Oil has already broken out and Total is close to it.  The charts of non American oil co's look better (how come? would they dare to reinstate windfall profit taxes? They need money!): Petroleo Brasileiro,

VII. Gold and Silver shares

Golden crosses and a well defined break through their secular down trend line is visible on the charts of most indexes (Gold miners index, CBOE Gold index, Gold bugs index HUI, Philadelphia Gold & Silver index). They ALL have higher objectives which will be reached once the present correction on Gold and silver is over. We guess this can be as early as mid-April. Looking at these charts, there is little or no room for Gold and Silver to come down - on the contrary!

Individual Gold and Silver shares show similar patterns with many reversed Head and Shoulder patterns like we have on Gold. The neckline has yet to be broken. However when it does it could generate fire works.

Anglogold looks promising. Durban Roodepoort clearly broke out and reversed trend, so have Goldcorp, Gold fields,  Harmony, Kinross, Newmont (was around before the Great depression and was able to preserve savings), Eldorado Gold, Royal gold, Minefinders,     

VIII. Industrial stocks- A lot of noise but no real change on the charts it is!

Some exceptions apply. Apple has done well; Bristol Meyers still shows this huge consolidation formation; Ford motor could be in a process to brake out; IBM looks good; Lockheed Martin (defense) could be breaking out;

>back to markets in a nutshell
 

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