Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Charts and Economic Data Point to a Bloody September for Stock Markets

Stock-Markets / Financial Markets 2011 Sep 05, 2011 - 06:46 AM GMT

By: Capital3X

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleSeptember is known to slay the mighty and yet it may just be the best opportunity of all months to make strong returns if one is able to realign portfolio to ride the momentum.

We will analyze charts from the Treasury market, S&P 500 Index, Volatility indices and AUD/USD to understand the market positioning. The data over the last couple of weeks has been negative the least to say.


The bull run seen the treasury market over the last 2 months show no signs of moderating. The TLT (20 year) daily charts:


The breakout by the Treasury market (IEI, IEF, TLT, TIP) to the upside is suggesting that stress is building in the system, as investors continued to flock to safety despite already record low yields. It is more a story of investors seeking return on capital but rather a return of capital.

TLT has now breached the key level of 100 and has closed at 112 highest closing level seen since 2008.
TLT is now well above the 50dma thus establishing the intermediate bull run in treasuries
Stochastic are well and truly above 50 and are turning up pointing to further gains
Vortex is indicating a continuation of the strong run seen since July 2011

The Monthly charts are stamping the findings of the daily charts:

IEF (3-7 year treasury) and IEI (10 year treasury) are have also run up 24% and 20% in July and August, thus accentuating the stress in the system.

Given the extreme flows into bond markets, it is only a matter of time before we see S&P breaking down. Unless treasuries turn down over the next few days, we could be in for a real nasty bloody month of September or even October.

The charts for S&P is now pointing to heavy losses over the course of the next few weeks

The stochastic having run strongly to 71 is now pointing downwards giving a strong indication of a false break in S&P 500. The vortex indicator is now also about to have the negative vortex to crossover the positive vortex which will further strengthen the case for a correction in S&P 500.

The AUD/USD, a prime proxy for risk ON trade, has broken down the key levels of 1.0650. We may prematurely conclude that a retest of 0.9940 is on the cards in which case, we are setting up for blood on the streets.


AUD/USD has broken key levels of 1.0650. A close below 1.06 could spell strong bearish momentum for equity markets globally.

The markets have been exposed to severe negative economic data over the course of the last 5 days. Recap here should speak volumes of the state of world economy.

Source: The world is slwoing

Unemployment

Initial jobless claims dropped 12K to 409K last week, roughly in line with the consensus. Separately, the ADP report showed that the private sector created 91K jobs in August, versus 109K in July and the 100K Street estimate. However, nonfarm payrolls had no net gains last month. The public sector shed 17K jobs while the private sector added 17K. Notable is that the Verizon strike caused a 48K drop in information industry jobs for August. With workers returning at the end of August, September payrolls should witness a corresponding lift.

Manufacturing slowing globally


While Developed markets slowed, emerging markets too are scrapping with 50 levels.


The JPMorgan Global Manufacturing PMI fell from 50.7 in July to 50.1 in August. The near-stagnation signalled by the index was the worst performance since the recovery began two years ago and represents a big turnaround in the growth profile of the manufacturing sector compared to the post-recession peak of 57.4 seen in February.

Personal Spending

July personal spending increased 0.8%, which is the biggest gain in five months. Meanwhile, the savings rate dropped to 5% from 5.5% in June. Core PCE index showed core inflation accelerated to 1.6% from 1.4% in June though the level remains below the Fed’s long-term target. Despite bad weather and a volatile stock market, August retail sales rose 5.5%, marking the 24th consecutive month for YoY increases. The back-to-school season appears to be off a good start. Interestingly, retailers serving better-off consumers, including Saks and Nordstrom, reported stronger sales versus the more middle-market peers.

Case Schiller House prices

Pending home sales fell 1.3% MoM in July, roughly in line with the consensus. However, the Case-Shiller home price index ticked up 3.6% in Q2 versus Q1. The housing market is likely to remain weak given the elevated unemployment rate, a large pipeline of foreclosed properties and tight credit. That said, expectations are low, so big negative surprises should be limited.

The string of bad data points over the last couple of weeks has now stoked fears of a strong double dip recession which not be entirely solved by a small QE3 but may need a larger size of asset purchases.

Given that Asia this morning, the only horse riding the growth, has also started to point to impending slow down, with HSBC PMI for HK coming in at 47. Any level below 50 is a sign of contraction.

Ultimately all this could just be a precursor to FED turning on QE tap once again in a desperate bid to re start a slowing economy. Strong build of stress in the treasury markets, negative setups in SP 500 and bearish indicators in AUD/USD are all pointing to further fall.

Given the charts and data, we can see important 10-20% setups across asset classes including forex, equities and commodities. For the record, we made 1408 pips of profit in August and 1002 pips in July. All this at a mere VaR of 3%.

Premium subscribers can login and check the latest trading portfolio for 5 September

Our feeds: RSS feed
Our Twitter: Follow Us

Kate
Capital3x.com
Kate, trading experience with PIMCO, now manage capital3x.com. Check performance before you subscribe.

© 2011 Copyright Capital3X - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules