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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (90506)	1/15/2008 11:16:06 PM
From: Proud Deplorable	Respond to of 110194

its in writing, a bank teller at HSBC told me...so bank on it >G<

To: NOW who wrote (90506)	1/16/2008 1:21:28 AM
From: John Pitera	Read Replies (1) \| Respond to of 110194

CRUNCH TIME in MarketLAND?? Hi Bob, A few observations I wanted to get out there. If we pull up a chart of the a Daily SPX chart over the past 2 years, we can see a Shoulder Head Shoulder Formation (actually a S-S-H-S formation. Today the SPX again closed near the neckline which is the vital support zone. In March 2007 the spike low found support at 1363.98. In August 17-18th 2007 panic we found support at 1370.60. Jan 9th was the the low of 1378.70, today we closed essentially at the low of 1380.95. I'd assign an 90% probability that we will break down through this support area. So what else is indicating this? The FXI --- the China ETF index. Pull that bad boy up. It has made a double top on on Oct 10th at 218.48 and then Oct 31st of 2007 at 219.56. Since November it has been in a very bearish decending triangle, with the flat horizontal support at 161-163. Today it Gapped down through that on High Volume, bearish for China and for equities overall. The Eur/Jpy cross rate-- as we have discussed here before, the key Eur/Jpy cross rate is the poster child for the bull and bear global risk appetite- risk aversion struggle. When the Eur strengthens against the YEN, we see equities go up, higher yield and commodity currencies, spreads come in and shrink between AAA/bbb bonds, credit default swaps get cheaper etc. All of these markets tend go in the opposite direction when the Market Gods bring on carry trade concerns and risk adversion sets in. The Eur/Jpy cross has just broken down in the past day below 158.50 - 160.00 and is heading lower... bearish for risker assets, such as stocks. The GBP/USD cross. The British pound has really sold off significantly since reaching a multiyear top of 2.1162 on Nov 11th. It has trade down all the way to 195. It has gone down from 240 to 208 against the Yen GBP/Jpy. And the Eur has gone from 69.22 on Nov 1 to over 76 again the GBP. Eur/GBP. I would surmise the reason it has been pounded so bad is that we see an asset follow out of Britain now that the bloom is off the rose of London's leading global position in the creation and trading leadership in many hybrid sophisticated financial securitization instruments such as SIV's and many additional financial engineering products. As these fall out of favor it hurts London's leading role in these products and markets.... As Ron Paul would say " the BlowBack" is occurring. The GLD Gold shares ETF that tracks the Gold Bullion price has had a very nice spirited run up to over 90 today and then had a bearish Key island reversal day where it made a higher high then yesterday, then made a lower low and closed below that low of the day before on huge volume of 25 millions shares, Greatest volume day it has experienced. Looking at the chart volume spike like today have come at very reliable turning points, both tops and bottoms the past 2 years. It makes sense that Gold would make a trading top here if these other market and asset class developments continue and/or accelerate. 2 principle reasons are that if the equity markets are breaking down and economic weakness is going to expand it cuts the tailwind from the commodities. And if Market participants have to sell and raise cash they tend to sell what they have profits in and there is the liquidity to sell in. Also when The instituions look at the asset allocation levels, they have seen percentage increases in components like Gold and may scale back if they have to sell. PAAS- Pan American Silver shows a good example of that on the big gap down bottom it made on high volume last Aug 16th and 17th during the peak of that phase of the global credit meltdown. John