The Market:
It appears that short sellers are unwilling to risk short positions in the face of government buying of equities and bonds....
I have observed that one of the best ways to see what's coming in the economy is to watch the SOX index relative to a market barometer like the SPX (S&P 500 Index). When the SPX makes a new high, SOX should confirm that new high by making its own new high (often, SOX will make a new high before SPX in a strong bull trend. When SOX fails to make a new high, or only grudgingly does so after SPX has moved to a new high, then I have to sit up and take notice. And, that's exactly the situation right now.
EUR/USD:
The Euro has had a breather from all the downside pressure that had been hammering it. But, that's just a pause before the next leg down. The Euro is a fake currency because it doesn't have monetary backing from its component states. The so-called "rescue" of Greece is a sham, with the union agreeing to rescue Greece only if it fails to find a lender willing to loan them money at any interest rate. In other words, if Greece faces the situation of failing to find lenders and interest rates go to infinity, the European union would then come to their "rescue" and offer to lend money to them at infinite interest rates (the union has agreed not to offer a rate lower than the highest rate offered by a lender). This sham of a "rescue" has satisfied the market for now. But, when the market realizes that's the bottom line, it will sell the Euro. Europe will not bail out any of the basket case economies within the union, which makes any "rescue" impossible. The Euro is a dead currency and just appears to be alive for now. When push comes to shove, everyone in Europe will bail out of the Euro and buy dollars as a safe haven currency as that currency simply disappears into the nothingness of the night.
The only way out for Europe is political union and that doesn't appear to be likely at all. The bad feelings engendered by the current crisis has made that possibility very remote indeed.
I continue to hold my Euro short position for the long term trend. And, I'm holding my short Yen position for now as well. Moreover, I'm long the Dollar Index via UUP.
Oil:
Oil is finally making progress toward tagging the 50% retracement level near 90 (88.235 Arithmetic Midpoint). This is the final stretch run that is likely to break the back of the recovery.
S@P Midcap 400 (Daily):
MID is stalling at the 62% measured move target (801.6445), money flow on the index is diverging bearishly.
Mining Stocks:
Trend is neutral in the mining stocks.
Gold:
I expect that Gold will slowly rise into August. After that, it's all downhill. |
