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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (12344)	4/21/2009 10:12:35 AM
From: Hawkmoon	2 Recommendations Respond to of 33421

VERY interesting article suggesting that AIG reduced it's CDS exposure significantly: The CDS market facilitated the expansion of credit in the good times. CDS created the opportunity for low risk investors to fund high-risk pools of mortgages. Unwinding the large AIG CDS positions had to have a contractionary impact on the total market capacity to absorb credit risk. At its peak in 2007, the shadow banking system was $10 trillion. If it is correct that the AIG unwinds totaled as much as $1 trillion it would constitute a significant portion of the off balance sheet debt market. A contraction of this magnitude in a short period of time would, by itself, result in significant market volatility as the underling ‘risk’ is repositioned. Yet another wave. If the AIG unwinds were responsible for the great ‘sucking’ noise of credit that we heard in January and February then it is also likely that the big swoon in equities prices during that period were a consequence as well. The move down in stocks during this period caused a drop in values of $2.5 Trillion in less than 60 days. No one factor was responsible for that decline. However, it is possible that an unintended consequence of the AIG unwind was that it caused/contributed to/accelerated the broad decline in global equity prices. brucekrasting.blogspot.com Further suggest that it accounts for some positive banking results. Hawk

To: Stoctrash who wrote (12344)	4/22/2009 1:48:20 AM
From: John Pitera	Read Replies (2) \| Respond to of 33421

Hi Trash, Looking at the EUR/JPY charts we have one of the best set ups in terms of the EUR/JPY being on a 4 panel sell signal in here. The daily EUR/JPY, the 60 minute EUR/JPY and the 30 minute EUR/JPY are all set up registering a sell signal on the EUR. Even the short term 5 minute charts look ready to roll back over. This is based on MACD systems on all 4 of the above time periods and also 5 and 21 period exponential moving average cross over systems on the EUR/JPY cross rate. The EUR/JPY cross rate remains 'uber" important in that global asset managers use it to move out of "Alpha rich" asset classes and higher yield /risk investments when the EUR/JPY is in sell mode. Conversely, they move into higher yield asset classes when they EUR/JPY cross is increasing. The EUR/JPY daily MACD was in solid buy mode from Jan 30th to March 30th of 2009...that meant it was time to be getting longer risker equity and yield asset classes. The plunge in the daily cross on 3/30/09 was then helping to set up the reversal we experienced going into the high on 04/07/09. The USD is on a sell daily sell signal against the JPY currently as is the GBP sterling against the USD. We should see some global pulling in of risk profiles during the coming few weeks. John

To: Stoctrash who wrote (12344)	4/22/2009 1:48:32 AM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Trash, Looking at the EUR/JPY charts we have one of the best set ups in terms of the EUR/JPY being on a 4 panel sell signal in here. The daily EUR/JPY, the 60 minute EUR/JPY and the 30 minute EUR/JPY are all set up registering a sell signal on the EUR. Even the short term 5 minute charts look ready to roll back over. This is based on MACD systems on all 4 of the above time periods and also 5 and 21 period exponential moving average cross over systems on the EUR/JPY cross rate. The EUR/JPY cross rate remains 'uber" important in that global asset managers use it to move out of "Alpha rich" asset classes and higher yield /risk investments when the EUR/JPY is in sell mode. Conversely, they move into higher yield asset classes when they EUR/JPY cross is increasing. The EUR/JPY daily MACD was in solid buy mode from Jan 30th to March 30th of 2009...that meant it was time to be getting longer risker equity and yield asset classes. The plunge in the daily cross on 3/30/09 was then helping to set up the reversal we experienced going into the high on 04/07/09. The USD is on a sell daily sell signal against the JPY currently as is the GBP sterling against the USD. We should see some global pulling in of risk profiles during the coming few weeks. John