Another great report from the Swiss team here below.
Its very tricky to plot the anatomy of the forthcoming ending of the bull market and the various twists and turns of a hard correction. Nonetheless it seems the team are doing a good job of doing just that.
Volatility is continuing with the Nikkie moving nearly 8% over night yesterday off the back of its central bank’s warm words. Below the team are expecting the sp500 to move to 1800 whereas Fitzpatrick is forecasting 1712 (which i more tend to agree with).
Without delay here the Swiss team’s latest:
And here Fitzpatrick with some similar looking levels:
The eurusd comments are the most interesting and controversial. Its true that speculators have used the ECB’s words to load up with euros for speculation. (The euro carry trade). Has the ECB been so successful in their strategy that even US speculators have been using the Euro as a funding currency for US$ positions? rather than funding these positions with US$ credit? Its complicated to try and establish numbers on these issues. (Certainly NYSE leverage suggests US$ leverage remains strong but on the cross implications may be negligible). I suspect its a matter of how long and how deep this bear goes as to whether there is a renewal of US$ repatriation. In the early stages its certain that euro credit repatriation will be at its strongest. If strong enough it can become a trade in itself of course. We see. The levels are clear.
Here RBC:
Back on the theme of fx, here a few fx tech charts:
Here Standard C with their weekly macro report:
That the correction is underway seem certain. How deep and how long it will sustain is up for debate and too a great degree will be government by how aggressive policy makers are in fighting gravity.