QE effect on Italy Stock Index MIBBubble from QE on Italy Stock index
Compensation loss index value
The devaluation of the euro is offset by index
06062014 index 22500 eurusd 1:36
180316 index 22500 eurusd 1:05
theoretical value index change at 1.05 is 17500. The QE and the weakness EURUSD have created a bubble in the value of 5000 points.. is not now but in the end the bubbles burst...
QE
Lumber is Sinking – Is Housing Next?Earlier this month, the idea of lumber being a signal for economic data was brought to the table (here). Lumber is not necessarily a trader’s first go-to for evaluating economic forecasts, but there is a striking resemblance in trend for lumber and the ISM manufacturing PMI data. As lumber prices dive, manufacturing data tends to do the same (and vice versa). Lumber, reasonably so, is also correlated to housing; and the US cannot have a recovery without housing participating.
The housing data over the last few years has been lackluster, and today’s data is no exception. Housing starts contracted a whopping 17 percent. That’s 14.5 percent lower than general forecasts. Weather was cold, and it is always to blame.
However, analysts were already discounting the weather issue. Wall Street’s best and brightest were looking for a drop of only 2.5 percent, so clearly it is not just the weather. According to the US Department of Housing and Urban Development, privately-owned housing starts were seasonally-adjusted at an annual rate of 897,000, or 17 percent below the revised January estimate. Single-family housing starts in February were at a seasonally-adjusted annual rate of 697,000, or 14.9 percent below the revised January estimate. Not good.
Housing completions of privately-owned housing fell came in at a seasonally-adjusted annual rate of 850,000, or 13.8 percent below the revised January estimate of 986,000.
The “recovery” bulls will harp on the permits data which was three percent higher than the general consensus. But, let’s be objective. Permits do not particularly matter much because builders cannot sell permits. Building permits are also cyclical. They tend to rise to elevated levels on optimistic outlooks but then completely collapse right be for the next recession. Permits could continue to rise, but it is not indicative of a healthy housing sector, or economy for that matter.
umber has closed well-below the massive ascending channel created when prices bottomed in 2009. Currently trading at $270.90, lumber prices are down almost 14 percent since first bring more attention to lumber a month ago. The basic assumption is that low prices are great for builders and the housing sector in general, and they are at the margin. However, a trend shift in prices indicate that homebuilders are not purchasing lumber. Homebuilder confidence fell for a third consecutive month in March.
Prices saw a bit of support at $265 but could easily hit $245 on trend continuation. To illustrate the correlation of lumber to housing, check out lumber prices relative to the iShares DJ Home Construction ETF (ITB) and the SPDR S&P Homebuilders ETF (XHB). It’s not a perfect match, but it grasps the overall trend quite well. Notice the prices of lumber, ITB, XHB leading into the housing crisis – they collapsed. This time should be no different.
The two popular ETFs now trade at a premium to lumber prices, but the upward trajectory is stalling; and this is far likely contributed to Fed-induced buying (similar to the XLE and future prices). It is only a matter of time before housing ETFs begin to rollover, too.
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EURUSD long at 1.040ECN's QE has been republished, market always buy the news, sell the truth. So EURUSD has been near the bottom.
Create long position at Weekly Channel support around 1.0400.
What's more, 1.0400 is 100% expansion after breakout 1.2200 trend line support at 2014-12-22..
XAUUSD: The fall will continueFor those of you who are following my analysis on a regular basis, you should not be surprised by the situation of GOLD.
I've already written in previous analysis the level of LEvel and the headline goal. Although 1040-1060 is the tricky level of GOLD bellow which the precious metal may fall well bellow 980. But we are not htere yet.
Having said that, the articulation and the choreoghraphy of macro economic news are almost as I 've forseen. Although at present I do not believe that FEd would increase its interest rate by June, en of 3Q15 may be the earliest moment.
For those of you who would like to enter long XAUUSD, I think that it isn't yet the right time.
A Wedge of Silver: Price Action Weakening to SupportSilver is, at times, violently volatile and noticeably a proxy for the US dollar. With the dollar at levels not seen since 2005 and 2006, sentiment for precious metals remain weak. There are two factors for this, and it does not matter which one chooses.
The dollar has been able to hold current levels via the perception that the Federal Reserve will - at some point - incrementally increase the Fed funds rate. Many believe this will happen because the US central bank has not boosted rates since 2006, and it is just time to do so. Others actually feel the US economy is "strong" enough to handle a increase in rates; although, one only has to look to the mortgage applications to see how sensitive to rates Americans really are.
The other fraction foresees deflation, if not just a prolonged level of disinflation. With over 20 central banks cutting rates this year alone, the currency war has been nasty. With each major central bank racing to devalue their respective currencies to zero value, the dollar is the de facto "winner." When currencies the dollar is pegged to within the dollar index drop, the dollar increases and further intensifies disinflationary pressures. That alone is negative for precious metals. What is not negative for precious metals is the likely reaction from the Fed to quell dollar strength and "boost" economic growth, more QE.
Silver is currently trading within a descending wedge, a technical pattern that consists of two trend lines that follow the trend but with price action ranges that begin to narrow. What is striking is that wedges are reversal patterns. This does not mean silver is poised to jump to the upside immediately, but it is a pattern to watch out for. Essentially, price action will continue to narrow on weakening volume to a point of support. Then, prices rally.
In regards to silver's wedge, traders are likely to push silver lower to support within the wedge as long as the dollar's strength remains. The wedge's descending trend began ounce silver failed to move significantly passed $18.50 per toz. Key support levels are seen at $16.05, $15.80 and $15.50 per toz.
With using the wedge to a trader's advantage, the rally from support that breaks the descending resistance is typically a "false" move. A pullback from the breakout will likely occur to key support, likely to retest the former descending resistance now support. If it is a true breakout, prices will climb higher from the pullback to support.
Range trading for a mini break out on the Italian MIBMaybe a little labour intensive for some but a safe way to book profit without much risk.
Buy and sell in 2 units at support and resistance. Move stops to protect positions. Take one unit profit at either support or resistance. Wait for break out in either direction. Repeat until breakout. Or leave it alone if it looses it's neatness and starts getting messy.
Low stress trading hopefully :)
Is the Swiss Franc to Blame for Gold's Pullback?The Swiss franc is lower on the day amid speculation that the Swiss National Bank (SNB) will intervene in the foreign exchange market in order to actively weaken the currency.
As you can see by the comparison, gold tracks the Swissy rather closely. Interestingly enough, gold's all-time high of $1,923 ended at about the same time the SNB decided to peg their currency to the euro. When the peg was first introduced, the single-largest daily inflow in the GLD occurred but had been wound down throughout the last few years. Traders matched that inflow into the GLD when the SNB pulled the plug on the peg.
However, I think the SNB is playing with fire. They have already taken a 60 billion CHF hit to their FX reserves due to the abrupt end of the euro peg. Furthermore, it became too expensive to keep the peg on the euro, so the SNB will likely hint at intervention as a means to keep traders from piling into it. This could work in the short-term, but these methods usually do not have lasting effects. With a balance sheet of almost 90 percent of GDP, the SNB's bluff will likely be called out in the long-run.
The franc has been a "safe" haven for investors, whether the central bank likes it or not. If global turmoil continues to strengthen, I expect the franc, and presumably gold, to increase throughout the year.
Keeping in mind, there is a 40 percent weekly appreciation that has to be digested.
The correlation should be watched further.
BTCUSD In Consolidation Mode/Coinbase Exchange ReviewPrice action broke from consolidation, and hovered underneath resistance at $333. Instead of trending lower, price action climbed the ascending trend line and rallied to $306. As said many times, these rallies are almost sold. This one was no exception.
Technically speaking, traders should have exited their trades after the ADX ticked lower, which is the first indication of momentum snapping (indicated by arrow).
Price action is held below broken, then reestablished, resistance (blue lines). A retest of $333 is possible, while a test of the fomer ascending trend is probable.
The FOMC minutes could provide momentum in any direction, given that this forex pair is bitcoin pegged to the dollar. A weaker dollar could provide momentum to $274, while $221 to the downside is possible on dollar strength.
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I was curious about the exchange that is offered by Coinbase. It is registered and fully insured, which is comforting. However, the web-based platform is rather archaic. There is virtually no charting ability, so traders will need to use their own of preference. It does offer a "depth" chart and order book. So, this may be beneficial to traders who can execute using these tools. The average trader may not.
Previously through Coinbase, it took 4-5 business days for a BTC purchase to complete or any dollar deposits. This was completely mind numbing. The exchange somewhat remedies this.
Unfortunately, the liquidity is ever present. For instance, only 2,000 BTC were traded in a 24 hour period when I used the platform. This could increase, but my order for .15 BTC took over two hours to fill.
The other issue is there is no speculation to the short side, and this creates a one-sided market (next EURCHF?)
The illiquidity is a major concern if traders look to use the exchange for that purpose. However, it is beneficial for those just looking to scoop up BTC without the four day hold.
I believe it could get better as kinks are worked out, but time will tell.
Full disclosure, I purchased BTC at $219 last week and sold at $274 on 1/26. Currently, a small speculation trade averaged in at $250 BTC/USD. I won't put substantial money to work, but it can pay for my chemical dependence on caffeine :D
Time To Abandon Preconceptions on Gold and the Dollar?Historically, gold and the US dollar move inverse of each other. Time to abandon this preconception?
The US dollar is going strong, but is it time to change the preconception that a strong US dollar is automatically bad for gold? Perhaps. The inverse relation has historically occurred, but in times of uncertainty, the inverse breaks and gold typically remains on top.
BlackRock’s Russ Koesterich, CFA, gives the inverse relationship the benefit of the doubt in Market Realist’s “Why Gold and the Dollar Move in Opposite Directions.” Koesterich goes to say that a strong dollar is bad for gold because it makes the commodity more expensive – this is true in relation to gold priced in any currency. The article also points out to the assumption that the Federal Reserve “may” raise rates, which is also is positive for the dollar, bad for gold. Conversely, this is one of the reasons I believe the Fed won’t raise rates. Deflationary pressures will continue to raise, and that is opposite of the Fed’s intentions.
Under normal circumstances, the inverse relationship of the two make sense. However, this is a time in history not seen before. Central banks are omnipotent, and their modus operandi is currency debasement. Gold priced in euros just reached a 21-month high, following the European Central Bank’s quantitative easing announcement; and gold priced in yen has been an amazing trade during the Bank of Japan’s kamikaze monetary policies.
But, the dollar is rising, not falling, right? True. The question is not why gold should fall given the strong dollar. The real question is “why is gold not falling given a strong dollar?” It’s simple: gold is a central bank hedge. The ultimate currency hedge.
Furthermore, the performance of the dollar – although not new – is not normal. Up over 20 percent since the parabolic move first began, these moves are often foreshadowing destruction of capital which quickly follows. In “US Dollar Rally: The Beginning of the End,” I outlined three previous times the dollar rose by at least 20 percent: 1988-89, 1999-2001 and 2007-9. Each move was followed by double-digit declines of at least 16 percent in the US dollar index. In addition, the last two descents took equities down with it – the “tech bubble” and the “Great Recession.”
Omens are lurking as the dollar and gold relationship is mirroring that of 2008.
In the above mentioned article, Koesterich presented a graph showing gold and the dollar. Notice January’s decoupling of the US dollar mirrors that in January 2010, following the Fed’s implementation of quantitative easing. So, is more easing from the Fed coming? Likely, and it’s more likely than a meaningful rate hike by the Fed.
Gold rose significantly in the dollar collapse in 2000-01 and 2007-09. During the Great Recession, gold was further boosted by the Fed’s ill-fated QE attempts. You do not need inflation for strong gold gains, you just need central banks to remain in business.
It is important to rethink common ideologies on investing because markets are dynamic and ever-changing.
This is why both fund managers and retail traders are slaughtered in epic market collapses. They fail to evolve along with financial markets, continuously trying to fit the round peg in a square hole with the square peg in plain site.
bullion.directory
Link to "US Dollar Rally: The Beginning of the End" bullion.directory
Gold Looks Promising Longer-Term(Originally posted yesterday with appropriate charts)
Gold takes a breather, while negative data continues to pour in.
Gold’s inability to close above $1,300 is a mild hit for bulls, but prices will likely consolidate prior to the next leg higher. Prices declined to $1,280 per toz., just above the descending trend line, now support. The likely scenario is that gold will reenter the ascending channel and grind higher.
Prices will look to regain $1,295, while a close below $1,273 will cause prices to push lower to $1,259 per toz.
The longer-term, monthly chart does look promising, however.
The price action in January has caused an overwhelming bullish monthly candle that trumps the previous two. Currently, price action is hung up around September’s close of $1,285 per toz, while price action resistance is found at $1,303. Gold has been able to recover from testing a longer-term ascending support trend line, but prices are still stuck within a descending channel created when the bull market correction first took place in 2013.
If prices can close above $1,303 then near-term resistance would be seen at $1,353; but, the next monthly target is found at $1,391.
There is accumulation of gold futures, which picked up since gold first bottomed at $1,130. Gold was overbought in regards to the near-term chart, and the easing off of $1,300 will correct that. The RSI is well from overbought, and it is ticking upward – a positive sign of more gains to come.
The +/- DMI is also looking promising. The negative price indicator (- DMI) has remained on top since the correction was first initiated, but it has recently given up ground. The + DMI is pushing higher, and a bullish convergence on the monthly chart could prove positive for that push beyond $1,353.
Please see full, original post here bullion.directory
Are ETF Inflows Suggesting Gold Has Room to Move?The GLD has seen inflows increase since the SNB debacle, up 1.57 percent today.
If anything was learned last week when the Swiss National Bank (SNB) unequivocally shocked the markets is, gold is the ultimate central bank hedge. Gold has always been a go to during times of uncertainty, but it is the simplest way to hedge away currency and counter-party risk; and some still believe the the SNB did not live up to their verbal agreement to markets to keep the euro-franc peg alive.
There has been a rapid move into gold-backed ETFs on the back of the SNB move. A total of 843,000 ounces of gold were added to these funds, as inflows increased 1.68 percent on Thursday and Friday of last week. This was the largest inflow since 2011, following the SNB’s decision to peg the franc to the euro (see the original ZeroHedge article here). The largest gold-backed ETF, iShares Gold Trust (GLD), is up over 1.5 percent today.
This could be an important factor in the long-term outlook for gold. Gold-backed ETFs are largely, if not almost exclusively, held by hedge funds and large speculators (whereas silver ETFs are popular with retail investors). The “smart” money could help the yellow metal push higher in order to hedge volatility and risk.
The GLD is getting extended on the daily merely on the price activity. However, like spot gold, it is far from overbought on longer-term charts. Look for traders to digest the move before continuing higher. The ADX momentum indicator is signalling a strong price trend. Look for GLD to target $126.50 before budding up against a near-term downtrend line.
The GLD was down 37 percent from its 2012 high of $172, but is up almost 15 percent since hitting the low of $114. This could be an import inflection point for GLD.
bullion.directory
Gold Nearing $1,300 – What’s Next?Gold is up 9 percent YTD.
Gold is on a tear since I warned that negative price action was waning on January 6 (here). Gold has been able to overtake the $1,240 per toz. hump and chug along on global growth concerns. The IMF, just among the bunch, lowered the outlook for growth prospects; and the second largest economy – China – is pulling back, down to the slowest pace of growth since 1990. Gold remains a safe haven.
Traders are shocked the yellow metal has been able to rally like it has. They often point to technicals or the US dollar, but there is one thing that trumps all of that – trader pyschology. There is a psychological connection to gold. It’s what the financial savvy want during times of uncertainty and what traders want to hedge their risk exposure.
Gold is “overbought” on the daily chart, but the weekly chart still offers room to move with the weekly RSI only at 60. The daily chart is, too, supporting further moves following a slight pullback. Price action since the beginning of the year has been able to break each key resistance level. Once it has closed above resistance, traders have testing the former resistance, now support, and gold has been able to bounce higher. $1,273 had been tested several times yesterday before moving through $1,290. I expect a test of minor support at $1,280, while $1,295 will be the next resistance hurdle.
If gold can close above $1,295 and handles the $1,300 psychological resistance, look for the “premier currency” to trade to $1,315 per toz. However, gold will likely see $1,280 (potentially revisit $1,273) on profit taking.
Gold is likely front running the potential for quantitative easing from the European Central Bank (ECB), but analysts are suspect when it comes to the size and structure of stimulus. The decision will be announced in two days by the ECB.
My call on Newmont Mining (NEM) has also produced gains of 13 percent (currently).
bullion.directory
EURUSD: Looking Ahead to Trading The ECB News EventArguably the biggest news event this week will be the ECB press conference Thursday 14:30 CET. Officially its just a periodic meeting where they convene to vote on their benchmark interest rate. But in reality, they will discuss the purchase of government bonds and all eyes will be on the press conference after the rate announcement, as the market expects Draghi to provide more details on the highly anticipated quantitative easing program (QE).
With the CHF cap removed, a large buyer of the Euro (namely the SNB) has suddenly left the market, leading to speculations whether they know something about the size of the ECB plans that made them decide to instantly stop buying. It has been reported that Draghi already met with Angela Merkel and her finance minister to outline the plans and Monday French President François Hollande stated the ECB will decide to buy government debt later this week. Add to that a favourable ruling by the European Courts of Justice and the surprise decision by the Danish central bank on Monday to cut its deposit rate (after interventions in the market proved insufficient). I have said it before and I will say it again: those who believe QE is not going to happen, do so at their own risk.
Although the size of the government bond buying is not yet known, it is expected to be large-scale, large enough to have a chance at driving the inflation in the Eurozone from the current negative territory towards the required 2.0%. Should indeed a full scale QE be announced (there is talk of as much as EUR 1 trl of bond purchases over two years), I believe the EU pair will dump and immediately start a further descent. In terms of predictions how much EU can fall with a full QE, I have read anything from 115, to 110, to 105 to even parity over time. However, if a smaller than expected QE would be announced (<= EUR 500bn), the pair might start a relief rally.
If this happens, it would not change my fundamental belief in the bearishness of EU, given the fact that the two central banks (ECB and FeD) would still have divergent policies keeping this pair under selling pressure long term, eventually grinding the price down further. In that situation, one of these central banks would have announced the printing of large amounts of money while the other has plans for a mid-year interest-rate increase. So regardless of the exact size of a QE: I was, am and remain bearish on the fundamental direction of EU, although obviously with a full blown QE the price will grind down faster and reach lower levels than with a lighter form of QE.
Resuming: I am looking forward to the ECB press conference on Thursday, I expect them to announce QE and therefore have a bearish outlook on EU.
-Aggressive traders, expecting a full blown QE (>= EUR 1 trl), can position themselves beforehand for a news trade with a directional bias in the anticipation the announcement will make the pair drop immediately.
-Conservative traders, expecting a lighter form of QE (<= EUR 500bn), can first wait for the news event itself to happen and then sell any rallies that might occur afterwards to get in on the bearish trend at a good price.
UPDATE: ECB did announce an expanded asset purchase programme, for a monthly amount of €60 billion. The programme will start March 2015 and last until September 2016, aiming to achieve inflation rates of 2.0%. As this full-blown QE was larger than expected, the EU pair dumped immediately (as I predicted would happen in that scenario) and is currently down 200 pips compared to when the press conference started. The 115, 114, 113, 112, 111, 109 and 108 handles have been broken and the pair is making new lows.
Gold Surges on ECB QE Rumors and Market TurmoilOn January 6, I noted how the price action technicals were beginning to favor gold (here). Since, gold has begun to rally with force on both a global growth slowdown and increasing market turmoil. Naysayers will continue to hate gold, but both fundamentals and technicals remain supportive.
The surprising (maybe not so much) move by the Swiss National Bank to abandon the EURCHF floor, in order to front-run the ECB’s QE announcement, sent shock waves through the financial system. It took only two months to axe the floor, following the gold referendum, after the SNB was so passionate about doing “whatever it takes” to defend the floor.
Price action surged above the 200-day EMA, which was pointed out as a secondary resistance level after overtaking the $1,240 key resistance level. Psychological resistance will be placed around $1,260, while price action has a chance to challenge the overwhelming downward trend created in March 2014.
Gold could find this challenging, as the focal ascending channel intersects the downward trend line at $1,272. It also corresponds with price action resistance. If price action is rejected, look for profit taking to take gold down to the 200-day EMA, perhaps the $1,240 level to test support. RSI is leading into an overbought condition, so this level could find consolidation before the next leg up.
However, if gold can over take it, I look for $1,295 to be the next key level of resistance, while $1,300 will act as a whole-number, psychological resistance traders seem to like. Above that, $1,314 per toz. is favorable.
We have now had several bars of strong, bullish volume above the 20-day average, and the ADX momentum indicator is ticking upwards – supporting the current uptrend.
Gold Hits Key Resistance, Trades Low on Equity HighsGold has played out well on a technical basis. My previous analysis was rather spot on, as price action was leaning towards support at $1,133 from $1,170. Price found support and moved higher to resistance level one of $1,179 before profit taking today.
Price action should remain within the descending channel, while a close below it will likely send gold quickly to $1,000.
See this week's analysis here: tinyurl.com
Please see previous analysis here: tinyurl.com
SHORT YEN ON QEPerfect techniclas & Fundamental Catalyst. After testing 50DMA (this is healthy) a Cup as formed and thanks to QE breakout is confirmed. First target is $113 but real money is made when riding the wave and enjoying the momentum until MA is violated. LREP!!
QE Effects on SP500,USD/JPY,10Y-BONDS,DXYFrom the effects of QE in the past, I want to prepare for the risk in "QE3-end" in the future.
I understand that Falling Stock-Price and Rising Bonds has occurred after "QE-end".
I want to pay attention to lower interest rates after "QE-end".
However, Stock price rise thereafter.
This is the key?
but..
We are confronted at time of "rate hike", this is different from the past two times.
Reaction to this is what about?
Market being aware of "rate hike" will be a support factor for USD.
But, it is also downside risk of US-Stock.
Gold, Silver, Wall Street, OilGold, Silver, Wall Street, Oil
Relative performance at 4 time frames
Note the drastic difference post-2007.
Also note the chaos of 2014
USDJPY: Keeping the 102.6 and 103.5 targetUSDJPY is almost at its lowest level but the pair is in a falling wedge pattern.
FEd decided not to increase its interest rate before 1Q15 therefore, the expected rise of USD against JPY has been a little bit delayed. however, USD is the string currency against JPY and there is no delay in the tappering program. I.E there will be less money in the market as far as the amount is concerned but there will still be cheap money in the market.
Coming back to my trading plan, the headline goal remain 102.6 and 103.5. We are at an oversold level at the present, and both indicator show that we are on the eve of an uptrend again.
Of course, one has to watch carefully 101.2 because bellow that level we may very well fall into 100.8 and even further bellow. But 101.5 is a solid support and resistance. If the pair raises over 101.3 to 101.5 and above, we can safely keep the target. At the present moment we are still in the safe side of the story.
CAC40. The correction has started. With cheap money on the market, a possible European QE, low interest rate, CAC has still a good perspective. Nevertheless, the index has finaly entered to a correction phase....
USDJPY: As usual short time short long time longWe do have 2 datas in hand.
1-FED will not review its interest rate on the upside before 1Q15.
2-BoJ is planning to reach it's inflation Target.
Japan will release important figure this week that may affect the pair. therefore one should be very caution before entering the market.
Having said that, on a long term basis, BoJ and FED are planning to increase their interest rate and USD will win against Yen. But on a short term basis, if Japanese retail sales figure as well as household expenses and National Core CPI are within the expectation or even better, then USD may loose ground against JPY on a short terme basis.
DAX: Correction has startedWell, the normal adage of a normal market trade says " sell in May come back in September." For those who are short since May it may have been a catastrophe. Having said that, The market is facing a normal and regular correction. This correction may last until 9400 or 9200. Bellow that level, it may very much slip bellow 8950.
Furthermore, the money is still very cheap, and there is no risk at a forthcoming futur that a big central bank such as FED or ECB lift up the interest rate. Therefore, until mid August, we may assist to a correction phase of DAX were buyers are on holiday and sellers preprared there order with a proper stop loss and a good TP.
