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Charlie Aitken

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How Watching Market Psychology Can Help You Time the Market

Elliott wave patterns in price charts reflect the struggle between the bulls and bears
By Elliott Wave International

 

Two economic reports hit the newswires Thursday morning (March 6). Both were important, yet each one had the opposite implication for the trend. The market chose one report over the other, and the question is, why — and what can we learn from that? Read more.

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A Yen for Gold

It’s hard to believe that it was only a fortnight ago that we commented on A Yen for a loss,” which discussed the increasingly desperate measures by the Central Banks’ in their idiotic attempts to stoke inflation and economic growth via policy tools destined to compound the problems that they presided over in the first place, too much debt!

One look at the screens this week confirms this, with over 40 global stock-indices now in a “technical bear markets,” cited by a loss of 20% or more, thereby guaranteeing even slower global GDP or out-right recessions, as stock-markets lead the economy, not the other way round as still taught in finance qualifications.

We will stick with the “Yen” theme again, reminding once again about its close correlation (albeit by showing it upside down) against its domestic stock-market, see “Judging Japan” of a year ago, Wall St and even Gold, last brought to our readers’ attention in November 2014’s “Gold Watch.”

So moving swiftly on we present:

11 Feb 2016 .

A 2010 to date weekly data chart comparing the $US Gold price with the $US/¥ inverted and overlaid. As can be seen, the correlation has been pretty good, “stronger ¥ = higher $Gold price,” and vice-versa

Final hint, by placing a Fibonacci re-tracement on the price of gold, it suggests a likely target of between $1380 and $1590, a great 10% to 27% further upside potential. Furthermore, if we get close to these targets, the downside on Japanese and US stocks is fairly large also.

So there we have it, “A Yen for Gold” looks a good bet.

 

 

 

 

 

 

 

Investment Markets Overview — W/E 29th January 2016

There was plenty of economic data to qualify for the lead-in this week, including the latest GDP readings for the US and the UK, the mid-week FOMC press release or the latest CPI number for the Euro-Zone, There was also plenty going on within the geo-political arena and we touch on the aforementioned topics further down this overview, as the top slot has to go to the Bank of Japan who woke everyone up on Friday morning. All pundits expected a “nil change” at their routine monetary policy meeting, but Governor Haruhiko Kuroda dropped a bomb-shell by announcing a move to negative interest rates, following the lead of the ECB, the Swiss and Denmark and just weeks after Kuroda rejected the idea of negative rates. The Nikkei leapt by 700 points closing its Friday session with a 2.8% gain, followed through by European and the main US stock-indices whose trading sessions reversed what were weekly losses. For more on this you may wish to visit Friday’s blog posting, “ A Yen for a Loss.” It was a bad week for the Japanese policy-makers, and policy-makers in general, as it not only re-iterates that the central banks are clue-less on how to deal with a credit deflation, but this week’s resignation by Japan’s Finance minister Akira Amari, the spearhead of its”Abenomics” strategy to boost growth and competitiveness, following allegations of accepting bribes, increases the dis-trust of politicians globally. A great movie currently doing the rounds, “The Big Short,” which is based on true events during the 2007/09 financial collapse, is a salient reminder not to rely on the integrity of the revolving door of “politics, banking and regulation,” you are truly on your own in respect of protecting your financial wellbeing.

29 Jan 2016

 

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  So ends the first month of the year and what a month it was, as US stocks took their worst January beating since ……

Charts:
1.  Indices Weekly
2. US Durable Goods Orders V US GDP
3. UK Services Index V UK Business Confidence
4. Japan Household Spending  V  Japan CPI
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

“The Illusionists are running out of Tricks.

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

A Yen for a Loss

The Bank of Japan Governor, Haruhiko Kuroda, surprised investors today, adopting a negative interest-rate strategy designed to encourage banks to lend in the face of a weakening economy. This despite a jumbo qauntative easing programme never seen in the history of central banking, where the bank now effectively owns all outstanding Japanese government debt and is increasingly buying up the “free-float” of the Japanese stock-market via ETFs.

Despite the current QE programme and its earlier effort back in the 1990s, GDP is falling, as are industrial production and household spending, whilst the inflation goal of 2% annualised remains allusive, stuck near zero with the odd month still slipping into de-flation.

This latest desperate policy move by the BOJ is taking a page out of European policy makers’ script in the goal of stoking inflation, despite it failing within Europe and in the US come to that. In fact Kuroda has even started mimicking “super Mario” in using the phrase, “I’ll do whatever it takes,” when in reality the “tool-box” they talk of is empty. In a credit induced deflation, inflation will only rise once the asset values propelled ever higher by the credit binge find a floor and they are a long way from that.

In Japan, bank loans are still the dominant form of credit provision, accounting for 87% of lending, with corporate bonds making up the rest. But the purpose of this overview is to look at the deposit base and surmise to any likely effect of negative interest rates:

29 Jan 2016 Blog

There are ¥675 ($US5.6) Trillion on deposit as shown by the black line above, whilst the red-line is the overnight call rate offered by the B of J on unsecured deposits. The data only goes back to 1998 and 1990 respectively, whereas the green histogram shows Japan’s main stock-index, the Nikkei Dow 225, which shows its credit induced high of 40,000, give or take, of late 1989. Judging by the rising deposit base, despite next to nothing in the way of interest compensation, a move to a negative interest rate wouldn’t be expected to start a mass exit.

Or maybe it will if it actually costs people to allow the banks to play with their money. Add in the fact that Japan’s deposit insurance is currently a derisory ¥10m / $83K, at a time that Japan’s debt/gdp is put at 500% according to McKinsey, a better solution may be as follows:

29 Jan 2016 Blog 2

Either way, Albert Einstein is widely credited with saying “The definition of insanity is doing the same thing over and over again, but expecting different results,” but the central bankers’ appear to be oblivious to this.

You, dear reader do not have to be oblivious to the risk, nor to the cost of using negative deposit accounts, in Japan or elsewhere, unless of course you have a “yen for a loss.”

 

 

 

 

 

 

 

Investment Markets Overview — W/E 22nd January 2016

As the rich and powerful met up in the Swiss ski resort Davos this week for the 3-day World Economic Forum, the UK based charity Oxfam, a 70-year old organisation working and campaigning in over 90 countries to reduce poverty, released their annual report aimed to coincide with the WEF, which states that 62 people now own as much wealth as half of the world’s population and that the world’s richest 1% now owns as much as the other 99%. The President of Oxfam America, Ray Offenheiser, goes on to say, “While such extreme inequality is bad for all of us, it’s the poorest among us who suffer the grimmest consequence,” but is this factually correct? And even if it is, a distribution of the top 1%’s wealth to the rest would result in everyone receiving just $US240, but at what cost? One could counter that it’s many of the world’s rich list, a large proportion who are self-made, are the job creators and innovators which at least adds to global economic growth versus “greedy government” and the myriad of bureaucratic organisations that surround it who, aside of acting as a “drag anchor” against economic growth, are swiftly moving from their socialistic ideals of wealth re-distribution to an all out command economy, better know as communism, a system that didn’t work too well over a long phase of the 20th century. The majority of the super-rich have their fortunes tied up within their corporations and, ironically, it’s been government and central bank policy, post the 2007 financial crisis, that has widened the gap between them and the poor as can be seen within a chart from the Oxfam report, which apparently originated at Credit Suisse (chart is within the subscriber’s version.)

22 Jan 2016

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  Market volatility continued this week, as the major world stock-indices lurched ever lower for the first part of it before staging a two-day rally ……

Charts:
1.  Indices Weekly
2. US Existing Home Sales  V US House Price Inflation
3. E-Z GDP Revisions V UK & World GDP Revisions
4. China GDP V  China Retail Sales
5. Commodity YTD  Moves

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

“If Debt is the road towards prosperity Zimbabwe would be a global leader.

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Last Chance Saloon

A belated happy New Year to all of our “followers,” and may it be a happy, healthy and prosperous one for you, albeit that the markets have started it in a dramatic and volatile fashion.

It’s that time of year when analysts look back on their work of the past year, to reflect on how many were good calls as opposed to the bad, whilst crystal-ball gazing for the current year.

Well I am pleased to report that in the main, most of our analysis and price targets proved to be correct, particularly in the two stand-outs, the Oil price and China, which the herd is blaming for the recent drama. So rather than trawl through all of last year’s postings let us focus on these two areas.

First up was our January 2015 piece, “Oil Price Collapse…Why the Surprise?”

Within it you will note that we flagged a concern over the Oil price back in July 2014, when it was at $106 a barrel and one of our chart indicators had turned from buy to neutral. Furthermore, with the January 2015 updated chart, when the price was at $48, we noted a further signal change and suggested a shorter-term possible bounce:

22 Jan 2016 Blog

Well, the bounce duly happened, albeit not to the extent that was expected, and whilst the model signal remained in neutral on this weekly chart until recently, it reverted to sell in June 2015, at $60, on our daily chart, with a signal promptly notified by email to subscribers’ within our “bespoke” service, for them to act on as they saw fit.

As for China, we issued various observations and warnings, including the mid-April “Twin Peaks” post observing possible peaks for the Shanghai and Hong Kong stock-indices and then, following the initial crash, an August piece entitled “After the Bounce” which suggested a possible 15% to 25% bounce towards 3600-3800 for the SH Comp and a 5% to 10% bounce for the World Stock Index, after the May to August rout.

The SH Comp duly bounced to 3680 from the August low of 2870, before rolling-over once more, whilst the World Stock index managed a 9.6% rally before starting to collapse, as can be seen here:

22 Jan 2016 Blog 2

The markets, including the two mentioned above have started another bounce, but as to those targets and for any further downside, you really ought to subscribe to our very modestly priced investmentimer service. For the price of a round of drinks it could make the difference of a great 2016 to an awful one particularly if this relly is the last chance saloon.

 

 

 

 

 

 

 

Investment Markets Overview — W/E 15th January 2016

US President Barack Obama held his seventh and final State of the Union address this week, in which his oratory was the usual upbeat “yes we can,” with jibes at the Republicans in what after all is an election year. It was, however more of a “state of denial,” particularly when it came to matters financial. He has personally forced through “Obamacare, aka the Affordable Care Act,” which is now being seen as anything but affordable by the beleaguered US tax-payer and small business owners, whilst at the same time presiding over the biggest build-up of US debt during any presidency in American history. With the interest-rate cycle turning higher and financial asset “values” threatening to repeat the 2007/09 debacle, the man has the gall to state, “Anyone claiming that America’s economy is in decline is peddling fiction,” to which we will answer with an extra chart this week, as charts never lie and are not fictitious:

15 Jan 2016 2

For the week:

15 Jan 2016

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

 As Obama prepares to exit centre-stage, the Republican wannabes continued the infighting this week, vying to fill the hot seat on behalf of their party ……

Charts:
1.  Indices Weekly
2. US Manufacturing Sentiment  V US Factory Production
3. UK Base Rate V UK Market Rates
4. China Stock-Index V  China GDP Estimate
5. Commodity YTD  Moves

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

“The Troika of Politics, Banks and Regulators Serve themselves Well.

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Investment Markets Overview — W/E 8th January 2016

Peace and goodwill to you all, albeit that the New Year started with a bang, literally in North Korea’s case as they tested an alleged Hydrogen bomb, whilst Saudi Arabia’s execution of a leading Shiite cleric has triggered the worst crisis between the Sunni kingdom and its chief Middle Eastern foe, Iran, in more than two decades. Nimr al-Nimr’s execution, one of the 47 executed, where all but one were Shia, was an illustration of Saudi Arabia’s “get tough” policy against Iran and internal dissent, but It’s a dangerous gamble for the “House of Saud” as 10 to 15% of Saudi Arabia’s Shiites live close to the world’s largest oil fields in the eastern region according to the CIA World fact-book. Some have suggested that it was a cruel ploy designed to spike the oil price, which failed miserably if it was, as the price of “black gold” tumbled by a further 10% over the first trading week of the year to $33 a barrel. The price collapse of the past 18 months is putting a considerable strain on the finances of both Saudi and Iran, and increasing domestic social unrest for Saudi in particular, as fewer bribes are dolled out to keep the population happy and subsidies on basics such as fuel are being reduced. To reverse this trend Iran needs a $70 oil price whereas Saudi need $90 a barrel, which is unlikely over the short to medium term. The financial markets also witnessed great tension during this brief year to date 2016 period, which is expanded on below.

8 Jan 2016

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  So volatility was evident within all financial asset-classes and global at that, albeit that stocks bore the brunt of it ……

Charts:
1.  Indices Weekly
2. US Trade Deficit  V US Imports & Exports
3. UK Unsecured Credit V UK New Car Registrations
4. Japan Wages V  Japan CPI
5. Commodity YTD  Moves

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

“Mind the Gap.

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