EurAnalysis

Alright. I think he is excited about the point 1.3070 (What he think only he knows and alerts the others).

In my last posted chart, I see the same possibility of testing the previous high. In the H4 chart E/U is comfortably making the attempt.

In the Daily, I am assuming a failure of that attempt but create another possible HH and test, then a solid Decline.

So there is no change of my view, only someone with cocky nature is not able to understand the chart.

Peace.

http://www.financialsense.com/contri...elation-bubble

Fundamental analysis of "buy and hold" companies is a quaint, Warren Buffetish notion that probably works in the long term. But as Keynes said, in the long term we're all dead. The big risk in today's über-correlated markets is systemic shock. One can practice due diligence on a company and buy at a reasonable valuation, but if global markets collapse the next day and don't recover for years, one has paid a lot in opportunity cost. In other words, tail risk is not reflected in fundamental analysis.

Fundamental analysis is valuable so long as the basic fabric of capital markets remains intact. In an insane world (where U.S. Treasuries and German Bunds are considered "risk-free", of infinite rehypothecation, where MF Global's John Corzine walks off with $200M segregated assets, of the London Whale, LIBOR, Goldman's muppets, regulatory capture of SEC and Fed, U.S. / China animosity and the dollar's loss of world reserve status) it's unlikely that business-as-usual will continue without a disruptive bout of creative destruction.

Precisely when and how it will occur is anyone's guess, but, unfortunately, old school techniques like cross-asset and regional diversification have lost their glimmer. Just as socioeconomic disparity is partitioning the globe into lords and serfs, so too has the market been divided into polarized castes of highly correlated risk-on assets and (scarce few) risk-off havens.
http://imagesize.financialsense.com/...erformance.jpg


Risk on-assets include equities, commodities, Emerging Market/commodity currencies, and high-yield credit. Risk-off is limited to the USD, JPY, "safe" sovereigns and gold.
The Correlation Bubble

Regional and sectoral equity correlations are on the rise.
http://imagesize.financialsense.com/...-1988-2010.jpg
Emerging Market / Developed Market equities are increasingly correlated, as are various asset classes.
http://imagesize.financialsense.com/...-1986-2010.jpg
There is a useful analogy that describes the de-compartmentalization of risk:

Oil tankers used to have one, big compartment in their hull. In choppy waters, that oil would slosh back and forth, the momentum of which threatening to capsize the vessel.

A new method was adopted: separate the oil into smaller compartments, which would diminish the momentum of the swaying liquid and increase stability.
http://imagesize.financialsense.com/...ks-cartoon.jpg
Image courtesy of Inside Job (A highly recommended film, the original analogy was about Glass-Steagall and Gramm-Leach-Bliley Act.)
Global markets used to be divided, where risks in one part of the world would not affect others.

Today, valuations are driven by monetary policy expectations; globalization of supply chains, capital and labor flows; ETFs and trading techniques (algorithmic) that bundle "risk assets" into a homogeneous category regardless of fundamentals.

Snippet:

More on how HFT is homogenizing the markets:

Cross-asset statistical arbitrage involves simultaneous trading of currencies, equities, and commodities. A computer model establishes and forecasts covariance between these assets, then algorithmically trades based on discrepancies between the expected relative moves of assets and observed moves. This type of statistical trading can provide liquidity and sap the market impact from trades in each asset class. However, the result is an increase of cross-asset correlation.

Example of HFT increasing short-term correlations:
http://imagesize.financialsense.com/...-intervals.jpg
The politically connected bank insiders and politicians get the first whiff of major policy changes and announcements. This puts mom-and-pop traders and retail investors at a serious disadvantage.

Fundamental analysis was the last stronghold of retail, but the animal spirits have been replaced with central bank-watching. Assets that should be sold to value investors and vultures at a deep discount are riding high (MBS, CDS, Eurobank equities) on the prospect that some sycophantic central banker will hook up Blankfein, Dimon, and Moynihan with 100 cents on the dollar (courtesy of Euro/Dollar savers).

JPM goes on:

This [correlation] trend has been caused by the globalization of economies and financial markets. We believe this globalization, and hence the high cross-regional correlation trend, is not reversible. While region-specific events such as the recent earthquake in Japan may soften cross-regional correlations, markets are not likely to revert to the levels observed in the mid-1990s, when the average correlation between EM benchmarks was close to zero and EM/DM correlation was only ~25%.

This trend of rising cross-regional correlation significantly diminished the once important diversification benefit of investing across emerging and developed markets. It appears that in the case of cross- regional investing, 'the only free lunch in finance' (a common reference to diversification) has been eaten.

The recent increase of equity correlation has largely been driven by the increased macro volatility since 2007. However, other structural reasons contributed to increased levels of equity correlation. The widespread use of index products (e.g., futures) and high-frequency trading strategies, such as statistical arbitrage and index arbitrage, are likely contributing to increased levels of correlation.

http://etfdailynews.com/2012/01/04/g...v-ewi-vgk-ewg/

Snippet:

In Celente’s latest forecast, titled, The First Great War of the 21st Century—Prepare, Survive, Prevail, he paints a bleak picture for 2012, predicting a worsening of class warfare that already wages within more than a dozen countries, from Tunisia, Egypt, Yemen, Syria, Bahrain and Qatar to the UK, Greece and Italy, which will eventually spread to eastern Europe/central Asia and more intensely in the United States.

But, what the world has seen so far is only a economic and social symptom of central bankers’ stop-gap remedies, haphazardly applied to the global financial crisis since its beginning in the U.S. and the fall of Bear Stearns in 2008.

After dozens of trillions of dollars thrown at a global solvency crisis with nothing but further deterioration to show for the money spent, some wonder if the world is about to slide still further into depression.

According to Celente, when the European Union falters from too much supply of debt coming due ($7.3 trillion from G-7 nations, see zerohedge.com) against the backdrop of sliding demand for more debt, the European domino will topple other dominoes, widening the global depression to include the world’s larger economies.

“If you live in Greece, you’re in a depression; if you live in Spain, you’re in a depression; if you live in Portugal or Ireland, you’re in a depression,” Celente said. “If you live in Lithuania, you’re running to the bank to get your money out of the bank as the bank runs go on. It’s a depression. Hungary, there’s a depression, and much of Eastern Europe, Romania, Bulgaria. And there are a lot of depressions going on [already].”

And as far as a Chinese riding in on a white horse to save the day, Celente said, it’s “highly unlikely. China has 1.3 billion people with a million problems . . . If the Europeans and Americans don’t buy a lot of crap, then the Chinese can make it and sell it to them.”

He continued to explain that China will then likely slow its imports of materials from countries which have been supplying mined product during the commodities boom, leading to a vicious spiral of increased unemployment and declining economic activity—a scenario strongly intimated by Dow Theory Letters author Richard Russell in his latest letter to investors (excerpts posted on King World News). Russell, too, expects a steepening U.S. depression, with 25 percent unemployment in the America as his target at the bottom of the depression.

I was just kidding and you took it serious ? ha common i know you are a patient trader and we understand that .

I am not so patient when it comes to reading cocky comments. Anyways looking ahead for a fresh week.

Peace.

http://www.321gold.com/editorials/pe...nto100512.html

Snippet:

Joining the Fed and the ECB's recent efforts to push stock prices higher was the People's Bank of China. The PBOC injected a net $57.9 billion into money markets last week, which was the largest in their history. The market's reaction was swift and profound, sending the Shanghai Composite up nearly 5% in just three trading days. The move higher was achieved despite the fact that manufacturing activity in China during September remained in contractionary territory for the 11th consecutive month and their GDP continues to falter.

The U.S. is headed over the fiscal cliff and into another recession but who cares? Investors can't sit in cash while the Fed is destroying the purchasing power of the dollar. Europe is in recession and its Southern nations are flirting with a depression; but it just doesn't seem to matter.

You can't hold bonds when the ECB is rapidly inflating the Euro and is pushing bond real yields further into negative territory in real terms.

China's growth rate is plunging and a substantial portion of their economy has been in recession for almost a year. However, it isn't enough to stop shares from turning higher. You can't hoard Renminbi if the PBOC is flooding the banking system with new money at a record pace.

Adding to the money printing mayhem was Chicago Fed President Charles Evans. He is the architect behind QE III, a voting member of the FOMC in 2013 and Bernanke's right-hand man. Mr. Evans hinted on Monday that QE IV is just around the corner--even though the echoes of QE III are still reverberating from Bernanke's lips. QE3's plan is to buy $40 billion of mortgage-backed securities every month and until the unemployment rate magically declines.

But Evans now says that the Fed should continue buying at least $45 billion more of long-term Treasuries and MBS, even after Operation Twist ends in January. However, he did not indicate that these new and additional purchases, which will start in January, would be sterilized.

The $40 billion each month of MBS purchases (QE III) is not sterilized, but the $45 billion in Operation Twist is sterilized. The Fed is currently buying long-term Treasuries and selling government paper that matures in less than 3 years to offset the $45 billion. But the reason why Evans didn't say that these new purchases would be sterilized is because they will not.

The truth is the Fed doesn't have many short-term Treasuries left to sell. Evans said the $45 billion a month should last at least a year. That's $540 billion worth of new central bank purchases of longer-dated Treasuries. However, the Fed cannot sterilize that $540 billion when the Fed's balance sheet shows that they are almost out of short-term Treasuries. So if the plans for QE IV go into effect; it would be an unsterilized, open-ended, double-down version of QE3.

Bernanke is forcing investors out of cash and bonds. Of course, the move into commodities and equities is being done is out of desperation. It is simply an effort to keep ahead of inflation; and in no way represents the hope that real growth will resume anytime soon. In fact, these counterfeiting efforts do serious damage to the economy.

But investors should never fight a central bank that has pledged to do everything in their power to prop up asset prices. A firm commitment from those that control the currency to systematically destroy its value renders investors with no choice but to plow money into precious metals, energy and agriculture.


###
Oct 04, 2012
Michael Pento
President: Pento Portfolio Strategies
(O) 732-203-1333
(M) 732-213-1295

http://www.paulcraigroberts.org/2012...oyment-report/

October 5. Today’s employment report from the Bureau of Labor Statistics shows 114,000 new jobs in September and a drop in the rate of unemployment from 8.1% to 7.8%. As 114,000 new jobs are not sufficient to stay even with population growth, the drop in the unemployment rate is the result of not counting discouraged workers who are defined away as “not in the labor force.”

According to the BLS, “In September, 2.5 million persons were marginally attached to the labor force.” These individuals “wanted and were available for work,” but “they were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”
In other words, 2.5 million unemployed Americans were not counted as unemployed.

The stock market rose on the phony good news. Bloomberg’s headline: “U.S. Stocks Rise as Unemployment Rate Unexpectedly Drops,” http://www.bloomberg.com/news/2012-10-05/u-s-stock-futures-little-changed-before-payrolls-report.html .

A truer picture of the dire employment situation is provided by the 600,000 rise over the previous month in involuntary part-time workers. According to the BLS, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.”

Turning to the 114,000 new jobs, once again the jobs are concentrated in lowly paid domestic service jobs that cannot be offshored. Manufacturing jobs declined by 16,000.

As has been the case for a decade, two categories–health care and social assistance (primarily ambulatory health care services) and waitresses and bartenders account for 53% of the new jobs. The BLS never ceases to find ever growing employment of people in restaurants and bars despite the rising dependence of the US population on food stamps. The elderly are rising as a percentage of the American population, but I sometimes wonder if employment in ambulatory health care services is rising faster than the elderly population. Whether these reported jobs are real, I do not know.


The rest of the new jobs were accounted for by retail trade, transportation and warehousing, financial activities (primarily credit intermediation), professional and business services (primarily administrative and waste services), and state government education, where the 13,600 reported new jobs seem odd in light of the teacher layoffs and rise in classroom size.

The high-tech jobs that economists promised would be our reward for offshoring American manufacturing jobs and tradeable professional services, such as software engineering and IT, have never materialized. “The New Economy” was just another hoax, like “Iraqi weapons of mass destruction” and “Iranian nukes.”

While employment falters, the consumer price index (CPI-U) in August increased 0.6 percent, the largest since June 2009. If the August rate is annualized, it means bad news on the inflation front. Instead of bringing us high tech jobs, is “the New Economy” bringing back the stagflation of the late 1970s? Time will tell.

'Time will tell' i luv dat.

starts to become attractive. let's see if stays in the gray area

U/C weekly

Next 2 Weeks are crucial for Bulls creating New Highs, I am Calculating on turning Bearish may be from last week of Oct or the first week of Nov.

We can expect some spillover during early trading today from payroll data Friday.

The bottom line is that the data is still too weak for the Fed to even consider ending unconventional measures.
Because of overwhelming bearish USD sentiment better US data seems to hurt rather than helps the feedback vs the Euro at this point.
The payrolls data took some immediacy out of any additional Fed stimulus action. The falling premium in crude is also taking a big bite out of the inflation bid. The U.S. data showed at least the economy was not heading back into a recession, further fueling risk appetite for higher yielding euro bonds.
The EZ finance ministers’ meeting on Monday is unlikely to be a major event as we don’t believe Spain will apply for a bailout at this meeting, it is more likely to do so at the next EU summit.

I typed this on my phone so sorrybout any errors


Good luck guys

Wulf

are you now?

i'm calculating a range of 120 - 140 for the next year.

LOL

Holding Long from 1.2825. I am considering you are trying to be funny.

i dont care what your trade is. if you make some money, I am honestly happy for you.

the point is that technical predictions so far out are wildly inane and pointless. your statement could be related to that of a coin flip.

lets talk about what happens on monday given a better than expected US unemployment reportt. that is a conversation worth having. everything else is speculation amongst a deluge of unquantifiable factors.

WHat MA's youre using there?

Oanda UK gaping down.

I totally agree. It is either new high or down we go.

http://clip2net.com/s/2neAp

lets see if we cant get some more going here... next hurdle is certainly the 1.3

Hmm US bank holiday + Eurogroup meetings.

When there is a bank holiday, the choices seem to be either absolutely nothing happening or a face tearing move happening.

Either way I have nothing on my radar technically at the moment and I'm waiting for some levels to form, so happy to do nothing.