SCHEDULED GUESTS FOR TUESDAY, December 18, 2012
Segment 4 – Anthony Cherniawski, Chief Investment Officer – www.thepracticalinvestor.com
CLEAR CHANNEL DALLAS – KFXR/1190-AM And Streaming Live @ www.yorbamedia.com
This afternoon I wish to start with Gold. Gold futures are down over 21 points as I write and have most recently dropped just below 1677.00. You will note that the charts attached is an end-of-day chart which doesn’t show intra-day action. I am looking for a decline below 1662.00, which may trigger a panic decline of over 500 points. Our charts show multiple bearish patterns, whith the least bearish pattern pointing to 1251.00 as the next target.
This kind of action in gold and silver shows a potential liquidity problem, which first shows up at the periphery of the markets. By “the periphery,” I mean the smaller markets that are most affected by liquidity flows. This morning Fedex reported that global deliveries are down substantially. This is highly unusual during the Christmas Season. Package deliveries are one of the best early indicators of an economic slowdown. In this case, the rate of decline indicates a high probability of a netive GDP in the first quarter of 2013.
Despite the increase of liquidity injections by QE4, the bond market is softening considerably. Today the Long Bond is down again (not shown in the chart). Should it decline beneath mid-Cycle support, there may be a substantial decline in bonds.
The scenario as I have described it so far is alarming, since it shows that liquidity is being absorbed faster than it is being injected. Ben Bernanke may be hiding another banking crisis in the making.
The SPX may be the last place to look for the liquidity crisis since the leverage is still positive. However, today may be an important pivot, which may bring back the margin calls once the SPX goes back below its 50-day moving average at 1414.36. Today’s probe higher stopped at the 78.6% retracement level, which is considered to be the maximum normal retracement.
This week is “quadruple witching” options expiration, which may increase market volatility considerably.
The Euro completed a double zigzag correction. Zigzag corrections are a good indicator of markets attempting to buy time. In this case, the second zigzag appears complete. Today is also a Cycle Pivot day, which allows for a reversal in the next 24 hours.
Good luck and good trading!
Anthony M. Cherniawski
The Practical Investor, LLC
P.O. Box 129, Holt, MI 48842
Office: (517) 699.1554
Fax: (517) 699.1558
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