Thursday, June 6, 2013

Down She Goes!

What a day in the financial markets especially the currencies. It started in Asia with a plummeting Nikkei 225 and Shanghai Index. The Nikkei has dropped a whopping 17% in less than 1 month, let that soak in for a bit. This morning we had the Bank of England and the ECB meetings which ignited strength in the Pound and Euro, now we are led to believe that things are better off across the pond by the banking officials. Who can you believe or trust these days, the answer is absolutely no one, sorry to say! During the noon hour today things got real interesting all at once-the Dow and the S&P both traded below their 50 day moving averages with the Dow trading down more than 100+ points. With this, the US dollar was sold off against every currency, with the Euro hitting over 133, the YEN exploding for almost 300 pips, the CAD and Aussie both up more than 150 pips from their lows. It has been a long time since I have seen a move like this in the currency markets, maybe years, as a matter of fact 2+ years, Japanese Tsunami period. I am going to post all of the currency charts together this evening and give a brief take of what I see going forward. These are all daily charts



I want to point out the technicals here as you should be able to see where we are at on these major currencies. The Dollar broke support and all the others plowed through resistance in a huge way. Please notice how they came right back to the support level on the dollar and the resistance areas in the others by the end of the day. A day like today, you either were positioned correctly for the dollar to fall and made some money. Those that were short the majors against the dollar gave up on their positions and threw in the towel, this is what causes an eruption in prices. I have been warning that I felt the dollar has run its course, it certainly appears to the case now.

What next? Tomorrow is the job report and the currencies sit right at resistance and the dollar on support. This could be one of those instances where the dollar goes up and the excuse given, is that a poor number was factored in by the markets or the dollar is continues its downward trek. It would not surprise me to see a bit of a bounce in the dollar short term, we will just have to see the number in the morning and watch how the markets behave.

As for the Metals, sorry but I am not impressed. We need to see Gold solidly above $1420 and Silver get rid of this stubborn 22 handle. If the dollar continues to fall tomorrow on a really bad jobs report, the Metals should be in business! Sorry to be a bit short on the metals.

Lastly, the Dow Jones was saved closing up 80 points, 200 points off of its lows! They can still tout that the Dow has never gone this deep into a year without having 3 down days in a row....GOLFCLAP!
It is my opinion, a very strong one at that, that stocks will need stronger global economic growth to support new highs in the markets going forward. I just think the ILLUSION may be coming to an end! The growth simply is not there! Be Very Careful tomorrow, do not try to be a hero to end the week, let the markets digest for a day and I promise you, the markets will be here next week, at least we all hope so!

Good Night
Martin


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