– VIX corrected some of the gains from last week in a consolidation formation. It remains above all of its Model support levels except the weekly mid-Cycle support/resistance at 19.32. Once above that, it may tackle the nearly 5-year-old Ending Diagonal which suggests new highs above those experienced in 2008.
SPX bounced at the trendline of a Broadening Wedge.
– SPX closed on Friday just above the trendline of its Broadening Wedge formation at 1630.00 and closed just above its Short-term support at 1654.18. The Broadening Wedge is capable of triggering a 20% decline, once it is crossed, with a 94% probability of reaching its target. The 13-year trendline just beneath 1600 is also a critical juncture. SPX has fulfilled the requirements for a Master Cycle high on August 2 and must decline imminently in a Primary Wave . Should it break below its Ending Diagonal formation, it suggests a move beneath the 2010 low.
(ZeroHedge) The Dow seemed the trigger for all things today as the collapse on Putin’s statement slammed the Dow into the red for the week (which would have made 5 weeks in a row, something we haven’t seen since the US downgrade in 2011). That was clearly unacceptableto someone, and the Dow soared 220 points on no news whatsoever to break the all-important “Mission Accomplished” level of 15,000.
NDX now sports a triple top.
–NDX now sports a rare triple top in the daily chart, but did not overcome its high of August 13. It also sports a Broadening Wedge formation with the same lower trendline as the Ending Diagonal, suggesting an average decline to 2344.00. NDX is now prepared to cross its cluster of supports starting at 3032.64. It is possible that NDX may also cross beneath its Ending Diagonal trendline this coming week, activating a decline toward the two formation targets.
(ZeroHedge) Today’s jobs number (and revisions) are sparking some initial vain hope that SepTaper is delayed and providing enough ‘optimism’ that Fed spice will flow just a little longer. However, as we have noted numerous times, the Fed is cornered and has to taper for four more critical reasons (sentiment, deficits, technicals, and international resentment) and Obama has already confirmed that the Fed will be Tapering ‘gradually’.
The Euro stalls at critical support.
– The Euro appears to have consolidated this week just above triple supports between 131.33 and 131.49. Beneath those supports are a small Head & Shoulders formation and Cup with Handle pattern that suggests the ensuing decline may be swift and deep.
(ZeroHedge) While the world was glued to the developments in the Mediterranean in the past week, Poland took a page straight out of Rahm Emanuel’s playbook and in order to not let a crisis go to waste, announced quietly that it would transfer to the state – i.e., confiscate – the bulk of assets owned by the country’s private pension funds (many of them owned by such foreign firms as PIMCO parent Allianz, AXA, Generali, ING and Aviva), without offering any compensation. In effect, the state just nationalized roughly half of the private sector pension fund assets, although it had a more politically correct name for it: pension overhaul.
The Yen probes beneath critical support.
–The Yen broke below its cluster of Model supports and now hangs in no-man’s land. The Cycles Model suggests two more weeks of decline. As the Yen loses its supports, the decline may shortly resume beneath the neckline in a Cycle Wave III, the strongest decline yet.
The measures come as the plant’s operator, Tokyo Electric Power (Tepco), struggles to prevent leaks into the Pacific Ocean and to find a way to contain and treat the huge volume of water that has accumulated at the site since it was hit by a tsunami in March 2011.
The US Dollar is challenging its final resistance.
– USD challenged its Intermediate-term support at 82.48 this week before closing just above its Short-term support at 81.90. This puts the dollar in a position to rally in a Primary Cycle for the next week or more. Primary Cycles are often spoken of in superlatives and the coming rally may be no different The trading community has been overwhelmingly bearish on the dollar, so a breakout may force the unwinding of the dollar shorts to fuel a very unexpected rally.
Gold resumes its decline.
(ZeroHedge) One of the most underreported sentiment shifts of the past week was JPM’s announcement late on Friday, that the firm quietly went long commodities – specifically base metals and copper (in addition to energy) – and the firm also closed it “sell” (i.e., underweight) in precious metals. This is not surprising: we had noted the ongoing purchasing of gold by JPM over the past two month (in part to restore its depleted gold vault inventory) when the yellow metal not only stabilized but promptly entered a bull market, returning 20% in a short period of time. And as gold was rising, JPM was advising its clients to sell.
Treasuries lose their Cycle Bottom support.
– USB plunged through Cycle Bottom support at 131.05 and appears to be ready to fulfill its Head & Shoulders target. The Cycles Model was correct in suggesting a potential retracement high last week, which may be followed by a possible plunge through the 32-year trendline (coming soon). The unfilled gap remains at 127.04, which may also initiate a new downside target with the violation of the Broadening Wedge trendline at 127.50.
(ZeroHedge) How Many Treasurys Do Russia And China Own?Between the two of them, this much: $1,414 billion, or 25% of all foreign held US Treasury paper.
Now the question is – if the military escalation begins, would one or both dump without regard for price, crush the carefully manicured rate-driven recovery, and punch the ultimate decision-maker behind the Syrian war, the Federal Reserve and the banker uberclass, where it really hurts?
Crude is probing near the peak.
– Crude has met its Head & Shoulders target and now may be probing at yet a new high near 116.00. The situation in the Middle East seems to be affecting the price of crude and there is no resolution yet to the crisis. There may yet be another probe higher this week, but a reversal from the top may be swift.. The Cycles Model suggests an important low may be coming around the first week of October.
(ZeroHedge) We are sure this is just a ‘transitory’ storm-in-a-teacup, but for those who ‘use’ energy, the price of the most important raw material in the world has never been higher on this day of the year than it is today… must be all this growth?
China may have completed its retracement rally.
–The Shanghai Index surged higher this week, retracing 67.5% of the decline from the Lip of its Cup with Handle formation. Odds favor that the retracement rally may be complete, although one cannot rule out a higher retracement. The influence of the Cup with Handle formation is similar to the Head & Shoulders formation and offers a particular target for this decline. The probabilitiy of meeting its target is 90%.
(ZeroHedge) It’s not worth shopping in China,” said one disgruntled middle-class Chinese consumer, adding, “If you can wait, do it elsewhere.” The reason is simple – massive price inflation. As the WSJ reports, clothing and other apparel is on average 70% more expensive for consumers in China than in the US.
The India Nifty headed for a breakdown.
– India Nifty pierced its Orthodox Broadening Top for a second time has made a 51.35% retracement of its decline. The standard retracement within an Orthodox Broadening Top is 50%, so the retracment may be complete, or nearly so. This may be the awaited reaction back into the Megaphone formation, which anticipates a potential rally back toward Short-term resistance now at 5699.97. Once below the lower trendline for the second time, the real decline begins.
(SovereignManBlog) For the last 24-hours, banker and fund manager friends of mine have been telling me stories about oil refinery deals in North Korea, their crazy investments in Myanmar, and the utter exodus of global wealth that is finding its way to Singapore.
My colleagues reported that in the last few weeks they’ve begun seeing two new groups moving serious money into Singapore– customers from Japan and India.
Both are very clear-cut cases of people who need to get their money out of dodge ASAP.
The Bank Index plunged through Intermediate-term suport.
– BKX retested Intermediate-term support at 63.21 and closed beneath it. This confirms the change in trend to a higher degree. A decline through the Diagonal formation may trigger a swift decline to the weekly Cycle Bottom support at 32.62 the October 2011 low.
(NBCNews) Switzerland’s banks on Tuesday issued an unusually direct apology for their role in helping tax cheats, following a landmark settlement with U.S. authorities which could threaten the existence of some firms.
The banks do not know the ultimate cost of a government settlement to a long-running U.S. drive to pierce the veil of Swiss bank secrecy. They have until the end of this year to come forward over tax evasion by their U.S. customers, under a deal struck with U.S. investigators to allow some banks to pay fines to avert prosecution.
(USNews) Last month, an unlikely pair of senators proposed new legislation to strengthen the financial system. The bill, titled “The 21st-Century Glass-Steagall Act,” would reinstate a Depression-era law that separated routine commercial banking from more speculative investment banking. It was sponsored by Massachusetts Democrat Elizabeth Warren, Arizona Republican John McCain and two others – a striking bipartisan alignment that drew wide notice.
Support came from the progressive left and the populist right. Opposition came swiftly from the financial industry. The main line of criticism is that the repeal of Glass-Steagall in 1999 did not cause the financial crisis, and so its reinstatement is not going to prevent a future crisis. These critics argue that some of the financial firms that failed, such as Bear Stearns and AIG, had nothing to do with Glass-Steagall, and Glass-Steagall would not have saved them.
Anthony M. Cherniawski
The Practical Investor, LLC
P.O. Box 129, Holt, MI 48842
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