– VIX closed under its weekly long-term support/resistance line after challenging it all week. It remains above weekly Short-term support at 13.34 and weekly Intermediate-term support at 13.25. VIX measures the hedging activity in the options market against the S&P 500 Index. Increased hedging activity generally precedes selling activity in the SPX.
SPX closed under its 13-year Top – again.
– SPX closed under the upper trendline of a 13-year Broadening Top formation at 1592.83. It is now poised for a possible 1-3 week decline that may erase all the gains since 2010. There are a lot of big investors trapped in this market. The ability to take profits is stymied by a lack of liquidity.
(ZeroHedge) The worst miss for US GDP since September 2011 was greeted by financial markets around the world in a variety of ways. Gold surged; the USD weakened (with JPY surging in an anti-Abe way); and Treasury yields plunged (amid increasing growth concerns. But the one market that anyone in power cares about, the US equity market, did nothing, absolutely nothing. We have two words for what the monetary policy heroine has done to our once useful ‘markets’, comfortably numb. It seems the bad-is-good, moar-QE trade is on in every asset class except stocks (for now).
…While NDX fails its bid for a new high – again.
–The NDX retested its high of 2 weeks ago and couldn’t overcome it. A break below its weekly supports could send the NDX to its weekly Cycle Bottom at 2091.08 or lower. Much lower.
What Happens When Liquidity Disappears?
The recent mini flash crash precipitated by a bogus Tweet that an explosion had occurred at the White House should give both traders and investors pause and for obvious reasons. What happens when market liquidity dries up? Let me show you.
The Euro is deflected by overhead resistance.
– The Euro eased down from its Intermediate-term resistance at 131.68 this week, closing just above Short-term support at 130.11. The probability of declining through the next formation at 120.70 is very high. The Cycles Model suggests we may see another 4-5 weeks of decline in the Euro.
(ZeroHedge) German finance minister Schaeuble just explained, in a seeming effort to assuage rising fears that the one core nation left in Europe will choose the game-theoretically optimal first-defection wins strategy, that “Germany benefits from the Euro more than others.” Indeed it does; as German firms are buying up strong competitors, clients or suppliers at a time when those companies are struggling to stay afloat through years of recession in their home markets and as shaky banks restrict access to credit.
The Yen is diving toward oblivion.
–The Japanese Yen fell away from its Head & Shoulders neckline and is on the verge of a 2-3 week panic decline. Unfortunately, a declining currency will not solve Japan’s social, economic and environmental problems.
(Reuters) – Bank of Japan policymakers are divided over whether the central bank can meet its inflation target in two years, underlining concerns it has set an unrealistic goal in its battle to end 15 years of deflation despite plans for a massive burst of monetary stimulus.
The central bank held off on offering any fresh policy initiatives following the April 4 policy meeting, when new Governor Haruhiko Kuroda stunned markets by promising to inject about $1.4 trillion into the economy to hit the 2 percent inflation target in roughly two years.
The US Dollar checking Short-term support.
– As USD closed at its weekly Short-term support at 82.58 this week. This leaves a higher cycle low at an important Pivot such as this, which indicates a powerful rally is about to be unleashed. USD may rally through early-to-mid May before the next onset of weakness. This appears to be the beginning of a new Primary Cycle rally that may surprise many with its strength in its most dynamic phase as it launches above the neckline. No one is commenting on the dollar, since it has had two weeks of decline. However, the long-term view is very strong for the U.S. Dollar.
Gold is not finished declining!
– This week, Gold made a 50% correction of its Flash Crash. The rally stopped at 1484.80, just points away from the lower trendline of its Orthodox Broadening Top. This may be the trigger for the next decline to the Broadening Top target of 1155.00.
(ZeroHedge) Gold and silver prices are plunging after the European equity markets closed. It seems someone got the tap on the shoulder and needed to fund some liquidity. Given the ‘unusual’ strength in high-beta European assets this week, it would suggest someone (or many someones) were short and squeezed to cover in a hurry and perhaps this post-close dump in gold and silver reflects the final end-of-week realization of losses that need to be funded.
Treasuries make a possible near-Fibonacci retracement.
– USB continued above Long-term support/resistance at 147.01, completing a probable 62.6% retracement. A reversal in Treasuries may bring a 2 week-long decline beneath its Head & Shoulders formation.
(ZeroHedge) Near multi-generational low bond yields, driven at least in part (and some think in full) by the undeniably large asset purchase program (Quantitative Easing (QE)) that the US Federal Reserve has been implementing in one form or another since the 2008 Global Financial Crisis (GFC), have pushed the question of whether or not the bond market is a bubble to the front of many people’s minds.
I think the rest of the article is tongue-in-cheek!
Crude has a big bounce.
– Crude challenged its weekly Short-term resistance (93.75) but closed beneath it in one of the strongest corrective surges seen in a while. However, it did not change the bearish outlook for oil. A breakdown beneath the Head & Shoulders neckline may mean a 50% drop in the price of crude.
Some call it the “holy rail.”
In Alberta Canada, an estimated 120,000 barrels of oil per day are shipped out by train to the U.S. east coast and Gulf coast region. By the end of the year – when several terminals are completed – that number could reach 200,000 barrels a day. Despite rail costs doubling pipeline tariffs, the logistics have often been worth the time for producers – those that have been able to get a better price railing it past the mid-continent refineries all the way to the US East Coast and Gulf Coast.
But just as Canadian rail use is set to soar again, say analysts – rail may no longer be economic.
China broke long-term support.
–The Shanghai Index retested its small Head & Shoulders neckline at 2244.00 last week and closed beneath weekly Long-term support at2193.50. Declining through the final support level may bring in a Master Cycle low in the Shanghai Index later in April at or near Weekly Cycle Bottom support at 1894.63’
(OfTwoMindsBlog) Despite the many differences between China and the U.S., their basic problems are remarkably similiar: an economy that increasingly serves a tiny Elite, and a political/financial system that is incapable of meaningful reform.
Setting aside the latest bird flu outbreak and sagging indicators of growth, China 2.0 is in trouble(with 1.0 being the Communist era of 1949 -1977 and 2.0 being the modernization/globalization era of 1978 – 2013), for it remains overly reliant on unsustainable growth dynamics.
The India Nifty made a 90% retracement of its decline from the top.
The India Nifty bounced to a 90% retracement of its most recent decline before rolling over on Friday. To many, this suggests that the decline may be over. Cyclically, however, this suggests that there will be a prompt decline back to the Head & Shoulders neckline and a probable follow-through to Cycle Bottom support at 5131.50 and below in the next 1-2 weeks. We may see CNXN enter a new bear market.
The Bank Index makes a final bounce.
– BKX bounced back above its weekly Intermediate-term support at 55.16 in a final effort at a retracement. The next goal is a break of the Ending Diagonal channel at 54.00. The decline may end in a Flash Crash as very deep targets must be met in a shorter period of time.
(ZeroHedge) Earlier in the week we discussed the dismal downward spiral that bank lending was implying for the euro-zone. Today, we get further confirmation that the credit creation business in Europe, the very life-blood of the pump-at-all-costs Keynesian economic world in which our super-inflated debt economies now live, is dead in the water. Not only did M3 come out well below expectations at 2.6% YoY (vs 3% Exp.) but loans to the private sector remain drastically in the red.
When just one firm accounts for 99.3% of the physical gold sales at the COMEX in the last three months it’s not what most of us on this side of the rainbow would consider “broad-based” selling. Of course discovering this kind of relevant information requires an internet connection, 2nd grade math and reading skills, and the desire to do a teeny-weeny bit of reporting. Sadly they’ve wandered so far down the rabbit hole that the concept of “physical demand” (i.e. people actually wanting to take possession of the stuff) is puzzling to them because the vast majority of the world’s so-called “gold-trading” takes place in the realm of make believe (which is their natural habitat). It’s all fun and games until somebody loses their metal and “somebody” has lost one hell of a lot of metal in the last 90 days.
(ZeroHedge)…it is clear the central banks themselves are now not only actively buying stocks but are actively encouraging it and propagandizing their efforts to lever this last policy tool left in the toolbox.
We end on that note.
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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