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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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Timing Japan

Japanese stocks, the Yen and gold are topics highlighted year-to-date within these postings, emphasising the relationship between these three asset classes via “A Yen for a Loss” penned in January, “A Yen for Gold” in February, moving on to, “A Yen for a Crash” earlier this month, which summarised as follows:

Keeping it short and simple: Stronger Yen = Lower Stocks & Higher Gold

The home-work appears to be falling on deaf-ears, certainly as far as the Bank of Japan is concerned, as a recent Bloomberg report states that it now holds over half of the nation’s exchange traded funds (ETFs) which are effectively stock-index trackers, making it a top 10 share-holder in about 90% of the Nikkei 225 Stock Average constituents:

29 April 2016

The Bank of Japan, of course, beats to a different drum than serious market analysis, deluding themselves and many others, that they and their counter-parts at the other central banks can really control Mr Market.

One look at the performance and volatility of the Nikkei and the Yen this year confirms that they not only have no control of the markets, it’s just a perception they have created, but they and their legion of followers, many of whom have stewardship over your pension and investments, are about to receive a major wake-up call:

29 April 2016 2

You do not have to be as blind as the central banks and their disciples; in fact you do not even have to do the research in respect of when and where to invest in respect of Japan and the other major regional stock-indices:

The first 100 lucky applicants to contact me are offered a 3-month free of charge access to our “Off the Peg,” service, which covers the main stock-indices of the US, UK, Japan, Europe X the UK, Asia X Japan, and $Gold, including any intra-month signal changes that transpire.

 

 

 

 

 

 

 

Investment Markets Overview — W/E 22 April 2016

This is an abridged investment market overview, due to travel commitments, returning to normal service next week. Economic data was mixed, such as US housing starts slumping by 8.8% in March whilst existing home sales jumped by 5% in the same month. The ECB left interest rates and stimulus on hold, more to do with the growing divisions within Europe on the effectiveness of negative interest and bond rates, such as the wrecking of pension schemes, than any largesse by dangerous Draghi. Meanwhile, out East, Japanese car manufacturer Mitsubishi admitted to cheating on fuel economy test results and like Volkswagen saw its share price hammered. Ironically, the Nikkei out-performed despite this news and the growing criticism over Abernomics. The UK saw disappointing March retail sales, its”engine” of economic growth, whilst UK government borrowing for the same month exceeded forecasts, this in a week when the same government had the Gaul to suggest that it would cost each of its citizens £4000+ by 2030 if they voted to leave the EU. Lately, every piece of dire news, economic or otherwise, is blamed on Brexit concerns, including the currency weakness, so in a week when Obama placed his “two-penneth” to the “debate” how do they explain sterling’s 1.4% rise?

22 April 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 . . .

  Economic data due for release next week includes unemployment updates for Japan and the Euro-Zone plus confidence readings for the  ……

Charts:
1.  Indices Weekly
2. US Consumer Credit V US GDP
3. UK Ave Apart Price V UK Ave House Price
4. Japan Ave Wages V  Japan GDP
5. Commodities Weekly

Table:

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

“Volatility, the only consistent Central Bank tool.

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

 

Blaming BIRTE

The Ante-Brexit rhetoric moved up a gear this week, as no less than eight former US Treasury secretaries warned that leaving the EU would threaten London’s pre-eminence as a financial capital, whilst the “chief” himself, President Obama, is expected to repeat his concerns as he starts a brief stop-over in London today.

Meanwhile, just about any piece of disappointing UK economic data released is seized upon as being due to the uncertainty ahead of the late June referendum on continued EU membership or otherwise, including the 3-month to February unemployment number released yesterday

Whilst the headline unemployment rate was unchanged, at 5.1%, there were concerns raised in respect of the 20,000 rise in employment versus the 60K created in the 3-month period to November 2015 and the 65,000 average of the period 2000 through 2007. So what to think?

As always, a picture tells a thousand words, so let’s look to the charts:

21 April 2016

First up is a long-term history of the jobs created (or lost if below the zero line) shown as pink bars, with the scale on the left. As can be seen, there has been a steep fall since the near 150,000 tallied for November 2015. Overlaid is the black-line, with a right-hand scale, of the Bloomberg “indicator of real-time employment,” known as BIRTE, a compilation of data from the European Commission, the Office of National Statistics and the Bank of England, none of whom have a particularly good track record for accuracy.

Either way, one can note a reasonable correlation between the two variables and can observe that whereas BIRTE led the decline into the lows of 2009, it is the employment change number that has been the leading indicator since the 2014 high. This would suggest that BIRTE is about to dive!

Of course the “talking heads” within the financial media have been grasping at straws to explain the rapid slow-down of UK jobs, including that of uncertainty surrounding the referendum. For ourselves, we remind of our February posting called, “Brexit, Socionomically Thinking,” which concluded that mood governs events and that the stock-index, in the UK’s case the FTSE All-Share Index, is the best “barometer” of it.

As can be seen from the updated All-Share chart below, the UK collective social mood has been in a falling trend for a year or so now, albeit that there has been a slight up-tick over the past couple of months:

21 April 2016 2

The stock-index is a leading gauge of economic data hence we shouldn’t be surprised that BIRTE and the jobs created are headed lower, as it will be the trend of the collective social mood that decides the referendum result.

So don’t blame BIRTE or any other news, financial or otherwise, just keep an eye on the All-Share Index as it will tell you all that you need to know in respect of the Yes or No vote.

 

 

 

 

 

 

 

Investment Markets Overview — W/E 11th April 2016

Labelled as “the biggest data dump in history,” the so called “Panama Papers” are having far reaching effects, not just in political circles, but for business and indeed for life in general. It is by far the largest and most damaging cyber-attack on record to date, releasing 11m+ documents including information on 200,000 plus offshore companies and 14,000 clients of Mossack Fonseca, apparently one of the largest facilitators of offshore companies and trusts in the world. Furthermore, the leaked information, initially to a German newspaper and subsequently shared with the “International Consortium of Investigative Journalists,” allegedly includes 12 heads of state, over 150 politicians, multiple financiers of terrorism and a fair sprinkling of CIA-linked companies. It claimed its first political scalp this week, as Iceland’s Prime Minister, Sigmundur David Gunnlaugsson, resigned, with the British Prime Minister, David Cameron, having a rather uncomfortable time trying to justify his late Father’s offshore activities. The largest corporate merger in history, valued at $US160Bn between Pfizer and Allergan, was pulled due to rushed-through proposed new regulations by the Obama administration, which would make it harder for the group to benefit from low Irish tax rates. The recent public spats between politicians and the likes of Apple, Google and other multi-nationals over paying their “fair-share” in respect of taxes, will no doubt ratchet up a gear and include the many companies who seek fiscal and regulatory arbitrage, such as FTSE 100 constituent Wolseley PLC, the world’s largest supplier of plumbing parts, which was founded in Australia, earns most of its revenue in the US, is listed on the London Stock-Exchange, domiciled in Jersey and pays its taxes in Switzerland.

8 April 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 . . .

   Returning to the “Panama Papers” a “Socionominist” is more interested in the “why now” as to the “why” the leak was made……

Charts:
1.  Indices Weekly
2. US Consumer Credit V US GDP
3. UK Ave Apart Price V UK Ave House Price
4. Japan Ave Wages V  Japan GDP
5. Commodities Weekly

Table:

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

“Logic, unfortunately, also disappears as Social mood falls.

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

 

A Yen for a Crash

he “talking heads” on the business TV channels’ are apoplectic today in respect of the Japanese Yen strength, struggling to explain why it is happening, when Abe-nomics suggests otherwise, and what does it mean for Japanese stocks, commodities, the carry-trade and the wider-world in general.

Regular followers of this column will recall two postings of earlier this year, “A Yen for a loss” from the end of January and a “Yen for Gold” of mid-February. At its simplest these highlighted 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, including the Bank of Japan move towards negative-interest rates. They also observed the close correlation between the Yen, the Nikkei and the fortunes of the $Gold price.

This relationship is updated in the chart below:

7 April 2016 blog

Keeping it short and simple: Stronger Yen = Lower Stocks & Higher Gold

So there you have it……nearly that is, but what about the title, “A Yen for a Crash?

Earlier musings also identified the relationship between the Yen and Wall St.

 

 

 

 

 

 

 

 

 

Investment Markets Overview — W/E 1st April 2016

The markets that did open on the Easter Monday, including the U.S, snoozed all day and for much of Tuesday, but then along came Janet, the Queen of Central Bankers, who told the markets just what they wanted to hear, “caution in raising rates is especially warranted.” Despite recent hawkish comments from a growing number of the Fed “team,” including the Fed Chair herself, Janet Yellen, in a speech at the Economic Club of New York put a fire under the market as she pushed interest rate- hike expectations out to H2 2016. The stock-market loved it, as did the price of gold, whilst the dollar was hammered, which of course was Yellen’s real agenda, as her retaliation to the “beggar thy neighbour policies,” of other central banks’ in trying to trash their respective currency values to gain a competitive edge in a world of shrinking trade, as highlighted within our weekly market overview of 18th March. Meanwhile, there were further signs of the inevitable global debt-induced overcapacity, as India’s TATA Steel announced the closure plan of the UK’s largest steel plant at Port Talbot. We expand further on the economic, market and political developments, including the steel sector, below.

1 April 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 . . .

   The “chickens are coming home to roost,” in respect of the inevitable consequence of far to loose monetary policies and the precursor to it ……

Charts:
1.  Indices Weekly
2. US Pending Home Sales V US House Prices
3. UK GDP V Business Investment and Govt Debt/GDP
4. China  V  UK Steel production
5. Commodities Weekly

Table:

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

“Logic, unfortunately, appears to be a foreign word to Government.

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

 

Investment Markets Overview — W/E 25th March 2016

It was a holiday-shortened week for most of the western part of the world and market trading volumes were at their lowest for the year to date. So, for a change this week, our market overview will be brief and let three charts do the talking:

24 Mar 16 .

First up is the year-to-date return for the main geographical stock-indices. The US has been the obvious “relative” out-performer, but that may be about to change as the investors’ absorb the final Q415 US GDP numbers, released on the “Good-Friday” holiday when the markets were closed. Whilst growth was revised to a 1.4% annualised pace from the previously estimated 1%, it’s a marked slow-down from 2.2% pace of the first three quarters of 2015 and of equal concern is the 11.5% plunge in corporate profits seen in Q4, the largest fall in 7-years, when they collapsed by 31% at the height of the financial crisis.

A Socionomic fact is that events lead news, not the perceived other way round. As such it’s interesting to note that one measure of burgeoning “il-liquidity” is hinting at the Dow’s next move:

24 Mar 16 2 .

Turning east the focus remains on China, where market volatility remains, aided and abetted by policy-makers who think they are assisting. Whilst the month-to-date return for the bench mark Shanghai Composite exceeds 10%, the YTD return is at -16%, the out-performer on the downside against the first chart worthies shown above. Two reports attract attention this week, one on the China real-estate bubbles, inflated ever larger of late, and one on the scale of overall economy-wide leverage, including the said real-estate and stocks. The former notes that the average apartment in China now costs 1.3m Yuan, or about $US198,000 whilst the average urban disposable income is 31,000 Yuan, giving a price/income multiple of 42 X, whilst it is an interesting reminder, thanks to Bloomberg, of China’s leverage versus the average reached before other notable crisis:

24 Mar 16 3 .

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 . . .

           “Stepping back often shows Clarity.

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

 

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