The reports this week i’m releasing today and later in the week a V2 as the Swiss team remain on holiday for one more week. Their first report back is the 21st of June ie next Tuesday. I wonder what they would make of world markets here.We can see that all the major technical contributors have multiple failed entries and have been cut up on this price action in recent weeks and months.
Its been a continued theme of my own book that i have remained in cash and taken progressively fewer trades as price has drifted around and clear direct has remained illusive.
Looking at the most recent price action of the last few week and subsequently we got some higher highs on some key US indexes which appeared to confirm a continuation of the US secular bull market. Now we have a mild retrace so far but the apparent picture across US indexes, transports aside remains of strength and continuation.
On the other hand we got some major failures across “ROW”, rest of world, markets at some absolutely key levels and with excellent momentum to the downside, which strongly suggests a continuation of their bear markets. All the key indexes failed and this was telling in terms of ROW.
Currency wise the JPY has made fresh highs vs the US$ and the Nik225 looks very sick indeed. The key eurusd is drifting around and yet to convince in either direction. CTFC suggests a fairly neutral trader position in the pair, looking for direction. The leveraged carry unwind has still huge potential especially given the euro banks balance sheets will have to cut if the cracks in the euro banks lead to bond holder and acc holder bail ins. That would provoke blood indeed.
When price provides a signal the eurusd pair will run and run as traders are neutral. The “sharks” will come to feed when blood is in the water on the pair. As yet we are still looking for traces of blood we will join when blood is in the water.
Bullion remains firmly bid here in most currencies. In GBPs gold has made new highs for the year and is in breakout. Euro wise 1.5% from new highs for the year. (I don’t include Bullion in the commodities as gold is money.
Commodities. Oil wise we have failing momentum. She needs to take a breather. Post the breather we see if she gets renewed momentum and a higher high. Chart and momentum wise she has the appearance of a major failure here at least for the medium term. Copper close to bread down of her key support. They are rolling over in the main.
I won’t run through the major charts here as you all have them on your screens already. The pattern failures and continuations are all crystal clear and you don’t need me to high light them. I would add that Credit Suisse has made new record all time lows with DB not far behind. The euro banks are close to making new record lows again and rumors are running rift of a major coming banking crisis. This time bail ins note! The EU rules changed 1st of Jan 2016. Account holders and Bond holders are in the line of fire on this occasion. If you hold “safe bond” funds please check now what assets these funds hold. Euro bank bonds are not safe assets any longer in the EU zone. The contagion to Eu pension cos is clear so please review your books now as regards to these exposures.
For my book i remain in an uncomfortable hold of euro, usd, and sgd cash. Some sgd reits and a long term position of bullion and gold mining stocks and indexes. I hold no US trading longs or shorts for now although I may be tempted to rejoin the trend on Russel2000 and sp500 long if we get to an exhausted level on this retrace underway. (Jury out for now on this). I hold trading shorts on the ibex35 and dax30. i have no position on jpy or Nik225 as yet.
Here Fitzpatrick over the last 2 weeks.
His tune has not changed though the patterns have altered, to my mind. I suggest he is beginning to ignoring what doesn’t fit to his thesis and this is very dangerous. But who am I to critic the highly paid and admired Fitzpatrick. Lets see. History certainly does rhymes but doesn’t repeat exactly so for now we respectfully give him the benefit of the doubt. I do believe his case is now under great pressure but, lets be clear, not dis-proven as yet. Just as the Swiss team were forced to ask what would negate their base case I would like to see Fitzpatrick start to ask the same questions of his own thesis.
Here GS.
Over the last few years the CTM tech team have notched up an excellent track record of trades but they have been knocked out again of some key trades and they are clearly struggling for direction here.
And latest GS
Here CS today:
cs-Investment Daily 13_06_2016
Here UBS Peter Lee with his technical review of stocks
Here Meisels
Again looking only at the US indexes with Ftse100 in this case.
And here CS on the weekly (Note I couldn’t agree more on their time line and risks)
cs-Investment Weekly Expert International 13_06_2016
Certainly the neo keynesian bazookas the BOJ and the ECB have fired alongside negative interest rates appear to be having negative effects on their banking sectors. Several of the large banks including here DB a few days ago are progressively vocal against these policies.
And here MS staying with the pack for continuation of the US$ bull.
And as you read through the MS gic weekly allocation summary you see the rose colored spectates continue.
It is the theme of US growth leading the way to world growth and the euro and Japanese markets joining the US upward trend, FX volatility moving back down and global growth renewing. This leads to upward earning expectations and general good feeling. This reminds me greatly of the great US Capex renewal in spending and the perpetual earnings growth. Both of which continually disappoint.
Yardeni data points here:
And here technical Indicators:
Watch the Euro banks and a step change in US volatility potentially here.
All the best
Rich