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EurAnalysis Kindergarten 24 replies

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  • #17,141
  • Dec 31, 2011 5:06pm Dec 31, 2011 5:06pm
I have an hour left here in 2011. Here comes 2012. A year of riches.

Happy new year everyone!!
  • #17,142
  • Dec 31, 2011 7:29pm Dec 31, 2011 7:29pm
Quoting AaronWard
Seriously cool chart
If there was easy money lying around,no one would be forcing it into your
  • #17,143
  • Dec 31, 2011 7:52pm Dec 31, 2011 7:52pm
Hiya knoholygrail

Is it possible for you to explain what it is that confirms decisive rejection of your defined support or resistance. Ta
The road to pipland is arduous and fraught with challenge.
  • #17,144
  • Dec 31, 2011 9:01pm Dec 31, 2011 9:01pm
Quoting PipKiller
.....

Didn't he say earlier he was spending the weekend studying.


Must have been studying the bottom of the whisky bottle
Lol..How did you know that?
If there was easy money lying around,no one would be forcing it into your
  • #17,145
  • Dec 31, 2011 9:02pm Dec 31, 2011 9:02pm
Quoting GoldMan.
Happy new year to everyone, keep marching on like a moth to a distant star and don't put your head down at difficult times. With sweat and tears march on to fulfill your dreams.
If there was easy money lying around,no one would be forcing it into your
  • #17,146
  • Dec 31, 2011 9:03pm Dec 31, 2011 9:03pm
Quoting Tyoon
I have an hour left here in 2011. Here comes 2012. A year of riches.

Happy new year everyone!!
If there was easy money lying around,no one would be forcing it into your
  • #17,147
  • Dec 31, 2011 11:39pm Dec 31, 2011 11:39pm
Quoting FXMindset
Lol..How did you know that?
I can see everything

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Happy new year.


We're only going to see 2012 once so let's make the best of it
I don't care which way the market is going as long as it's going my way
  • #17,148
  • Jan 1, 2012 12:09am Jan 1, 2012 12:09am
Quoting traider
Hiya knoholygrail

Is it possible for you to explain what it is that confirms decisive rejection of your defined support or resistance. Ta
I had determined before my trades that I only will trade EUR/USD short for the time being. Therefore I was only looking at resistance at 1.3000

If it had gone over 1.3000 and stayed over I would have concluded that it was not a good trade plan. However as I explained it the odds were good it was not going over. I kept moving my shorts up nearer to 1.3000 so I was able to get good profits as I moved in and out as I described my trades. If this is helpful I can repeat the exercise next week. I never make a trade just to be in the market. I want the odds in my favor as much as possible. 1.3000 Resistance was a good point to use.
  • #17,149
  • Jan 1, 2012 2:41am Jan 1, 2012 2:41am
Welcome to 2012 everybody all over the world.
Now that 2011 has been left in the dust, let us all look forward to a healthy, wealthy and happy future. May the force be with us

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Those who say it cannot be done should not interrupt those who are doing it
  • #17,150
  • Jan 1, 2012 2:50am Jan 1, 2012 2:50am
Happy new year.

maybe i will share the holy grail with you in 2012

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AVT INVENIAM VIAM AVT FACIAM
  • #17,151
  • Edited 3:25am Jan 1, 2012 3:02am | Edited 3:25am
FORECAST: TOP MARKET MOVERS FOR 2012 & WHAT TO DO

To evaluate the likely top market movers for 2012, the top considerations were:

1. Likelihood of occurring in 2012
2. Impact on global economy if it occurs

Our overall conclusion is that the global economy this time next year will be anywhere from stagnant to deep recession, depending mostly on whether the EU avoids a breakup, orderly or otherwise, in 2012. The global economy remains mired in a process of shedding the debt that has fueled much of the growth for the past 30 years. The process is necessary, unavoidable, and bearish for the coming years. Here are the chief concerns for 2012.

EU: Sovereign Debt And Banking Crisis

A slowdown appears likely, but can the EU avoid a crisis?

Likelihood of occurring in 2012: High for slowdown, medium for crisis

Impact: High

Yes, plenty of other black swan events are conceivable, but the EU remains the most likely source of trouble and market moving events.

Specifically:

1. If the EU can continue to prevent a major sovereign default, markets stand a good chance of ending 2012 flat to higher.

2. If not, the most likely result is a banking and global economic crisis at least as serious as that seen in 2008 after the Lehman Brothers bankruptcy.

While some like Nomura Bank believe markets have partially discounted an EU credit event, we do not. As of the end of 2011 the bellwether S&P 500 is around 1260, less than 8% off its 2011 high of ~1360, and less than 13% from its all time high at around 1560. That hardly seems to discount the global depression risked by a wave of sovereign defaults. Remember, compared to 2008, the world’s economies are weaker and the developed world carried far less debt, particularly the public sector following assorted stimulus measures over the past years.

While we believe #2 will occur eventually, it’s impossible to say how long it can be deferred. That will depend greatly on unpredictable political decisions. The EU appears to be aiming for an “orderly default.” While the details of that are unclear, the term does suggest they’re aiming for defaults without market panic, asset price collapse, and bank runs. Theoretically that may be achieved via a clever combination of capital controls, bank holidays, money printing, and state guarantees of too big to fail (TBTF) institutions. We wish them luck. Too much more austerity risks an exit by the debtor nations, and any significant devaluation of the EUR risks an exit by Germany and possibly a few other nations committed to preserving the value of their citizens’ savings.

There are so many uncertainties and ways that this could play out.

While the modern world as we know has seen numerous defaults in peripheral economies, it has never experienced the potential wave of sovereign defaults that could occur. Unlike in the past, the 17 Euro-zone nations cannot print their way out of default, and are unlikely to ever be able to agree to do so. Germany and a few other relatively healthy hard money economies have shown no sign of willingness to accept being stuck with a drastically weakened currency. Even if they would, they’d demand a level of austerity and surrender of budgetary control that the debtor nations do not appear ready to accept.

A few weeks ago ratings agency Fitch publicly concluded what some senior EU and IMF officials have asserted anonymously for months: that the EU and EUR as we know it is beyond repair, given the low chance of member nations agreeing to a workable solution. We agree, but can’t say when the breakup comes or what form it takes.

China Slowdown

Likelihood of occurring in 2012: Appears high though lack of transparency in China data adds uncertainty

Impact : High

There are abundant signs of a significant slowdown in China, like huge residential housing projects sitting complete empty, collapsing real estate prices in second tier cities, etc.

The problem is that data out of China is notoriously unreliable. As the world’s second largest economy, it’s only large growth engine, and by far the largest customer of most industrial commodities, any slowdown here gets felt globally, particularly in commodities and the commodity related economies like Australia, Canada, Brazil, etc.

US Slowdown

Likelihood: High for stagnant to worsening economy but the degree of decline depends greatly on what happens elsewhere.

Impact: High

With the US, we don’t have as many uncertainties as with the EU and China.

Unlike the EU, there’s no threatened wave of sovereign and bank defaults without a central bank committed to printing enough cash to prevent it.

Unlike China, data is more transparent and reliable.

Data over the past months has been relatively good, leading many to believe the US can somehow decouple from slowdowns in the rest of the developed world. We disagree.

WEAKNESS IN HOUSING, BANKING, EMPLOYMENT, & SPENDING CONTINUE SLOW, SELF-FEEDING DOWNWARD SPIRAL

The real estate/construction sector collapse, which radiated through banking and into the rest of the economy and brought the current slowdown, remains in effect. No surprise because we’re not in a normal cyclical recession. Were that the case, GDP growth would be running at more than twice its current levels, and unemployment would have fallen rapidly.

Instead, the official (and understated because it excludes those who’ve given up seeking work) 8.6%, U.S. unemployment continues to undermine consumer spending, the largest part of US GDP. Monthly Non-Farm Payrolls have averaged a gain of 108,000 for the past 15 months, inadequate to accommodate new jobseekers, let alone replace the ~6 million jobs lost (mostly to cheaper emerging markets) since the start of the financial crisis. The Labor Participation Rate fell to 64% in November, its lowest level since 1983 – hardly representative of a healthy economy. Data on the housing market is mixed, even before considering the hidden excessive inventory and record numbers of households swamped by negative equity, which suggests that further deterioration is equally likely.

Employment linked to real estate, construction, and related retail, together with housing equity withdrawal, boosted U.S. growth between 2000 and 2007. Without a significant improvement in housing, we don’t see how employment and spending will materially improve.

CORPORATE GUIDANCE BEARISH FOR Q4 2011 EARNINGS

We’ve had over 80 negative preannouncements on earnings per share for S&P 500 companies from September to the beginning of December. This is the highest number of negative pre-announcements since the fourth quarter in 2008 and it includes marquee names such as DuPont, Texas Instruments, and Intel.

Cost cutting has helped earnings since the start of the financial crisis over three years ago. However, that fix is reaching its limits, particularly regarding staff cuts. US corporations continue holding cash hoards (despite low returns), because they don’t see worthwhile opportunities, at least not in the US. That lack of expansion further depresses America’s jobs, spending, and growth outlook.

Don’t be fooled by an upbeat Q4 earnings season. The lower guidance is part of the usual game. It will justify low-ball analyst estimates that will be more easily beaten, and the ‘surprising’ number of beats could justify some kind of rally. The high percentage of beats will likely be taken

US DEBT GROWING

Meanwhile US government debt continues ever higher. After a series of stimulus programs since 2008 the central bank’s balance sheet has grown from 500 bln to $2.8 trln.

While the US does not face an immediate solvency crisis like that of Europe. It can print money as needed and sell bonds as long as there are buyers willing to hold dollars. Still, it’s on the same path as Europe and Japan, and is showing no signs of addressing its own growing deficit. Congress remains unable to reach agreement on a long term solution, and is unlikely to impose pain on voters in an election year, or apparently at any point until a crisis forces a decision.

In addition, the Fed has committed to keep rates low until mid-2013, and the coming debates in Congress will be about raising the debt ceiling and extending the payroll tax cut. Both are likely to occur in some form given the coming election year.

Conclusions & Ramifications

Given headwinds from stagnant growth in most of the major economies, downside potential is far greater than upside, hence our bearish bias for 2012. So what do you actually do about it? We give a brief outlook for the following assets.

STOCKS

As noted above, we expect slowing to declining growth in the EU, US, China. Japan and the rest of the BRICs face the same, and the UK looks almost as bad as the EU. In sum, at best we get a modest rally, more likely flat to lower, possibly significantly lower if the EU blows up. The major indexes will reflect this. Longer term investors should either play the downtrend with short plays and/or selectively by income top quality income stocks during panic driven plunges in order to generate some income with cash they don’t need for a few years. For what it’s worth, the consensus on Wall Street is that stocks close next year a bit higher. A recent survey of 16 top analysts’ targets for the S&P 500’s 2012 close produced a mean of 1367, with individual forecasts ranging from 1238 to 1500.

Again the big wildcards here are the EU crisis (bearish) and new stimulus programs (bullish). An EU blowup sends stocks down, stimulus from the US or EU gives them a lift.

FOREX

While our overall bearish view suggests long positions in the safe haven USD, CHF, and JPY, that will only work if you’re taking 12 month or longer positions, and can handle lots of volatility during that time

EURUSD

Expect further attempts to shore up confidence about Spain and Italy in order to get their borrowing costs lower. If these fail, the Euro-zone and EUR as we know it is finished, most likely continuing with a reduced membership. That drama virtually insures that the EUR tests all time lows, probably close to parity.

CHF, JPY

The picture for the CHF and JPY is less clear, because both the BoJ and SNB are actively intervening, though markets eventually overwhelm these attempts, and will overwhelm them if the EU blows up. The CHF is our favorite long term long position, given the country’s solid finances. Japan, in contrast, with its record debt to GDP is a known disaster waiting to happen. However as long as its current account remains positive markets have been willing to trust it and buy Japan bonds, though everyone acknowledges this can’t continue forever.

COMMODITIES

Oil

Flat to higher. Even with economic slowdowns, supply questions and geopolitical uncertainties suggest more upside than downside. Again, if the EZ blows up, expect oil, along with all risk assets, to dive.

Gold

Unclear. The trend towards easing among virtually every major central bank should be great for this ultimate fiat money hedge. However gold will struggle to recover in the coming year due to:

- Selling from those who piled into this trade too late
- Selling from those seeking cash in times of fear
- Low inflation concerns from low growth

DISCLOSURE /DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY, RESPONSIBILITY FOR ALL TRADING DECISIONS LIES SOLELY WITH THE READER. IF WE REALLY KNEW WHAT WOULD HAPPEN, WE WOULDN’T BE TELLING YOU FOR FREE, NOW WOULD WE?
Those who say it cannot be done should not interrupt those who are doing it
  • #17,152
  • Jan 1, 2012 3:53am Jan 1, 2012 3:53am
Quoting Tyoon
...Sorry Rekon I don't mean to be picking on you today, I do have respect for you. However, I don't want this statement to stand for all us learners here who use technical analysis. I have strong reasons for why I primarily use technicals and one of them is not compensation for lack of fundamental understanding.
It is ok Tyoon .. we question until we are satisfied with the answer ... we agree .. we disagree ... I feel there are separate queues ... we consciously or unconsciously find ourselves in the queues then after realizing we change the present queue and go for a better queue. Learners also have different queues may be that comment applicable to me only not for you .. cheers ... have a very prosperous new year ahead
  • #17,153
  • Jan 1, 2012 4:05am Jan 1, 2012 4:05am
Quoting Tyoon
Cheers for that kno. A few nuggets in there.




Sorry Rekon I don't mean to be picking on you today, I do have respect for you. However, I don't want this statement to stand for all us learners here who use technical analysis. I have strong reasons for why I primarily use technicals and not one of those reasons is a compensation for a lack of fundamental understanding.
If there was easy money lying around,no one would be forcing it into your
  • #17,154
  • Jan 1, 2012 4:05am Jan 1, 2012 4:05am
Quoting PipTrapper
Welcome to 2012 everybody all over the world.
Now that 2011 has been left in the dust, let us all look forward to a healthy, wealthy and happy future. May the force be with us

Attachment
If there was easy money lying around,no one would be forcing it into your
  • #17,155
  • Jan 1, 2012 4:06am Jan 1, 2012 4:06am
Quoting rekon67
It is ok Tyoon .. we question until we are satisfied with the answer ... we agree .. we disagree ... I feel there are separate queues ... we consciously or unconsciously find ourselves in the queues then after realizing we change the present queue and go for a better queue. Learners also have different queues may be that comment applicable to me only not for you .. cheers ... have a very prosperous new year ahead
If there was easy money lying around,no one would be forcing it into your
  • #17,156
  • Jan 1, 2012 4:08am Jan 1, 2012 4:08am
Quoting PipTrapper
FORECAST: TOP MARKET MOVERS FOR 2012 & WHAT TO DO


i totally agree with u...expecaially ur view on EUR,CHF and YEN.....also gold
Bismillah
  • #17,157
  • Jan 1, 2012 4:08am Jan 1, 2012 4:08am
Quoting rekon67
It is ok Tyoon .. we question until we are satisfied with the answer ... we agree .. we disagree ... I feel there are separate queues ... we consciously or unconsciously find ourselves in the queues then after realizing we change the present queue and go for a better queue. Learners also have different queues may be that comment applicable to me only not for you .. cheers ... have a very prosperous new year ahead
I had to go back and edit my previous post. I was so tired my words were all over the place.

Quoting PipTrapper
FORECAST: TOP MARKET MOVERS FOR 2012 & WHAT TO DO.........

The EU appears to be aiming for an “orderly default.” While the details of that are unclear, the term does suggest they’re aiming for defaults without market panic, asset price collapse, and bank runs.
Excellent brief for the year. So much bearish expectation.

I particularly believe that if there is no eventual resolve for EU they will want to go down as gently as they can.

This year will be a great learning curve.
  • #17,158
  • Jan 1, 2012 5:23am Jan 1, 2012 5:23am
euro near a decade in the market

2-2-02 till 2-2-12..

will euro survive?

should be a ?????? marks!!!
Bismillah
  • #17,159
  • Jan 1, 2012 6:52am Jan 1, 2012 6:52am
all the best wishes for 2012 to all. Keep to your trading plan if your not sure dont trade. If you dont trade you dont lose? some nice info from piptrapper but i actually read it different perhaps we have different news sources. i feel very uneasy regarding China and i am more than positive that our lovely leaders cameron and obama will pound it into us that we are all threatened with terror but who knows from where next.But what ever happens i'll be trading my plan wayhay take care all BEST WISHES
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #17,160
  • Jan 1, 2012 8:23am Jan 1, 2012 8:23am
[quote=PipTrapper;5259015]FORECAST: TOP MARKET MOVERS FOR 2012 & WHAT TO DO

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Thank you for a very precise and sensible analysis. This is a great general road map for ordinary people like me.

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"FOREX

CHF, JPY

The CHF is our favorite long term long position, given the country’s solid finances."

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Now, requesting your guidance as to what, in your view, should be the preferred Trading plan (and, for which CHF pair) for taking advantage of the CHF strength ?


Sincere heartfelt thanks for all your great guidance and contributions during 2011.

And, of course, very Happy and prosperous New Year.

Regards.
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