ColinTwiggs, Author at the patient investor

October 5, 2011

Kiwi dollar

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The Aussie dollar found support between $1.23 and $1.24 against its Kiwi counterpart. The trend channel has weakened and AUDNZD is now likely to range between $1.24 and $1.28. The primary trend remains down, however, and failure of support would offer a target of $1.20*.

AUDNZD

* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20

October 5, 2011

Commodities drag Aussie Dollar and Loonie lower

Falling commodity prices have started a primary down-trend on both the Australian and Canadian dollar. The Aussie rallied off support at its target of $0.94, but respect of the (secondary) declining trendline would warn of further losses.

AUDUSD

* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

The Loonie also bounced of $0.94 and is testing the first line of resistance at $0.9650. Respect would again warn of further losses.

CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

October 5, 2011

Dollar Index reaches target

The strong advance on the US Dollar Index continues. Now that the index has reached its current target of 79, expect retracement to test the new support level at 76. Respect of support would confirm the primary up-trend and offer a target of 84* for the next advance. A trough above zero on 63-day Momentum would strengthen the signal.

US Dollar Index

* Target calculation: 80 + ( 80 – 76 ) = 84

October 5, 2011

Commodities down-trend accelerates

CRB Commodities index broke out below its trend channel and is now retracing to test the new resistance level. Respect of resistance at 300 would confirm the breakout and warn of an accelerating down-trend. The 63-day Momentum peak below zero indicates a strong primary down-trend.

CRB Commodities Index

October 5, 2011

Spot gold correction tests $1600

Spot gold is testing support at $1600/ounce, but the primary trend remains upward. Expect a rally to the declining trendline. Breakout above $1700 would indicate the correction is weakening, while failure of support would test $1500*.

Spot Gold

* Target calculation: 1700 – ( 1900 – 1700 ) = 1500

Amex Gold Bugs Index, representing un-hedged gold stocks, is testing primary support at 500. Failure of support would warn of a reversal in the primary trend and would be a bearish sign for spot metal prices.

Amex Gold Bugs Index

October 5, 2011

Tesco’s UK sales slide as consumers cut non-essential spending | Business | guardian.co.uk

Tesco has reported its weakest six-monthly UK sales figures for 20 years as higher food and fuel costs contributed to stark decline in spending on non-essentials such as gadgets, CDs and games in its stores.

UK like-for-likes, excluding petrol and VAT, declined 0.5% in the six months to 27 August, with underlying sales down 0.9% in the final three months of the period.

via Tesco’s UK sales slide as consumers cut non-essential spending | Business | guardian.co.uk.

October 5, 2011

Oil touches new 2011 low – Business – CBC News

The price of oil, Canada’s biggest commodity export, reached a new 2011 low Tuesday.

November oil slipped as much as $74.95 US a barrel, its lowest since September of 2010. It recovered somewhat, but still closed down $1.94 at $75.67 on the New York Mercantile Exchange, its third straight day of losses.

Crude rose to three-year highs this year, but the reasons often cited for that increase — fears of growing Middle East tensions, rising Chinese demand, bullish views from investment banks and expectations of an aggressive U.S. stimulus plan — have diminished.

Other market watchers have suggested the price gained solely because of rampant speculation on the commodities markets.

via Oil touches new 2011 low – Business – CBC News.

October 5, 2011

How did Europe’s bank stress tests give Dexia a clean bill of health? | Business | guardian.co.uk

It may seem like a lifetime away, but it is only in July that the European Banking Authority published the result of “stress tests” on 90 banks across 21 countries in the EU, covering around 65% of the banking industry.

Eight failed. Sixteen were border line with core tier one capital ratios – a key measure of financial strength – of between 5% and 6%.

So presumably, Dexia, the Franco-Belgian bank on which markets are currently fixated, was in one of the danger-zone categories?

Well no. Its statement issued on the day proclaimed “no need for Dexia to raise additional capital”.

…….The tests have proved to be meaningless even quicker than they were in 2010 when Ireland’s banks were given a clean bill of health, only to be bailed out four months later. In July, 2011 the EBA had been reckoning that the capital shortfall of the banks that failed was just €2.5bn. Now the markets reckon that the hole is more like €300bn.

via How did Europe’s bank stress tests give Dexia a clean bill of health? | Business | guardian.co.uk.

October 5, 2011

The Sceptical Inflationist | Steve Saville | Safehaven.com

The reason we are in the inflation camp is that the case for more inflation in the US doesn’t depend on private-sector credit expansion; it depends on the ability and willingness of the Fed to monetise sufficient debt to keep the total supply of money growing. A consistent theme in our commentaries over the past 10 years has been that the Fed could and would keep the inflation going after the private sector became saturated with debt.

Up until 2008 there was very little in the way of empirical evidence to support the view that the Fed COULD inflate in the face of a private sector credit contraction, but that’s no longer the situation. Thanks to what happened during 2008-2009, we can now be certain that the Fed has the ability to counteract the effects on the money supply of widespread private sector de-leveraging. The only question left open to debate is: will the Fed CHOOSE to do whatever it takes to keep the inflation going in the future?

via The Sceptical Inflationist | Steve Saville | Safehaven.com.

October 5, 2011

Is the SP 500 on the Verge of a Rally? | JW Jones | Safehaven.com

After the nasty downside probe today, there are layers of buy stops above current price levels. If price worked high enough, the stops would be triggered and an all out rally could play out. Anything coming out of the Eurozone that appears to be either stimulative or that appears to push an ultimatum out on the time spectrum will be viewed as positive.

Often news and price action play out together at key support/resistance levels and it would make sense that some form of announcement will be made when the S&P 500 price is sitting right at a long term support level.

via Is the SP 500 on the Verge of a Rally? | JW Jones | Safehaven.com.

That would be a bear market rally rather than a reversal.