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The Week Ahead
Submitted by Nic Lenoir of ICAP
Nothing much has changed since Friday. CIT's bankruptcy has been made official, but apparently it's pretty good news. I could not come across one article that viewed it as a bad thing, as certitude funding/financing is pretty much guaranteed for the lender. ISM this morning should confirm/invalidate the strong pick up in PMI last week. The $1Tr. question remains whether the government induced bounce in industrial production worldwide can last. Will administrations remove accommodation, and if so has the consumer recovered enough to pick up the slack. Beyond these considerations remains the obvious truth that the system remains overleveraged and it will at some point blow up. Roubini discussed it this weekend in a FT article, and it's a topic we have covered at length as the short-USD carry trade has brought nations as fragile as Venezuela to issue debt in USD.
Facing uncertainty, risky assets corrected last week and are getting cloe to key levels. EURUSD is leaning on the support of the daily trend channel, and AUDUSD has bounced on the identical support. S&P & Dax Futures are in the process of completing a 5 leg impulse from the tops. The 100-dma should be the near term support for the Dax, along with 1,012/1,020 for the S&P future. On a rebound we would like to see 1,070.5 and 5,600 hold to remain in a bearish dynamic. If numbers don't surprise on the upside 1,041.50 should be resistance in the short term as we exhaust the move lower testing around 1,018.
Observe carefully 0.9190 in AUDUSD and even more carefully 1.4860 in EURUSD. Both resistance if broken trigger a double bottom pattern, especially clear on the EURUSD. A clean break there would indicate traders should probably get long for a possible return of the carry trade.
10Y Treasury futures we recommend watching closely the 117-20/119-02/07 range. If risky assets bounce/consolidate we should test 117-20, and based on overall risk appetite we will either go break test 120-20, or test 113-15. Much will depend on macro-economic data and central bank activities to withdraw/inject liquidity. Unlike most people who argue that there is still a lot of money to be deployed which will keep a bid behind this market for the next 6 to 12 months, we feel there is a risk that people who are actually in the green for the year may find incentive to protect what they earned, and on the heels of a 60% rally there is little rush to jump in and buy into a small correction going into year end. The lack of volume throughout the entire rally since March means any sizable profit taking could seriously challenge the progress made to date.
Good luck trading,
Nic
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Brilliant. Thank you.
Ps. I hope everybody reads this one.
Until this graph stops going straight up (http://research.stlouisfed.org/fred2/series/WSECOUT), there is no way the markets will ever go down.
I want to see that graph built into a rollercoaster attraction....
Yeah, so much for that.
HAHAHAHAAAHAHAHAHAHAAHAHAHAHAHAHAAAAHAHAHAHAHAAHAHAA!!!!
Green sharts breaking out all over.
Another good report NIC. Thanks for you're update and insight.
I think Roubini, as many here including myself, underestimated the size of the pump and the market's unabated rise but as far as macro calls like he is now making about total system leverage he stands almost alone just like 3+ years ago. Remember CNBC showed him the door for a year when he was to negative? I'm probably wrong again (cash).
CNBC wants no part of the truth, therefore guys like Roubini, Shiff, and Rosey get cut off, slammed, and mocked by the dipshits on that channel.
I happened to catch a little of Fast Money the night after they had Rosey on. That interview was posted here on ZH for all to see the lunacy that went on. The following day, they ran a poll asking the viewers about the recovery or something similar to that. 62-63 percent of them voted in favor of another dip. In other words, most were bearish.
Once they showed the poll, just before a commericial break, that asswipe Joe (buy everyhing in the world) Terranova, just to get one more dig into Rosey said "how many times was Rosenburg allowed to vote."
Click, your done. I hope their rating falls to the same level as their IQ.
Thank you.
www.dailymarketadvice.com
It doesn't get simpler than this folks - just stay long Gold and chillax. Throw all your charts and other assorted exotic "indicators" in the trash can. BUY GOLD NOW.
I still don't get the GO ALL IN LONG GOLD advice we occasionally see. We've been complaining about the influence of central banks and corrupt powerbrokers for the last year. Why get into the gold market, which is (according to even the most ardent precious metal fans) 100% controlled by the biggest, most powerful, most corrupt thugs on the block?
I mean, I understand the whole fiat currency thing, but it just doesn't strike me as a tradeable or investable thesis. Unless you're banking (haha) on a complete currency collapse... is that the angle?
Anyway, I'm not looking for an argument, just want to understand.
Let me just say that it's the Neo of investments right now - an elegant solution to a complex equation, if you will.
And it is not "100% controlled" by the thugs. They are just minor irritants in the bigger scheme of things.
Citi Bankrupt viewed a good thing?? not if your a taxpayer just out 3 B, or a shareholder..
Where is a good Knee cap buster when you need one...
CIT bankruptsy, not Citi. The analysts are all saying it will be good for bond holders and that it wont affect the small business clients that depend on CIT for financing but most are missing the CDO/CDS/CMBS and other derivative trash that is tied to, backed by, or references CIT. Chances are this is going to be very bad in the weeks ahead. Read up some of the postings at zerohedge over the weekend regarding CIT, they were excellent!
The CIT bankruptcy will cheat the Taxpayer out of 2.3 billion dollars. How many more bankruptcy's will do the same with our hard earned money? Enough!
Amend the Bankruptcy code now, make all taxpayer financial contributions, bailouts, etc, nondischargeable under any chapter of the code regardless of the instrument or contract under which the funds are acquired or secured. Give the Federal Government top priority and the Fed Reserve 2nd priority.
Make the code amendment effective upon enactment. This will protect the taxpayer going forward, because we will be paid first and or have a continuing lien of the assets of the company.
We were promised that if we gave the Treasury TARP funds that the taxpayer would make money.
Currently, taxes are not dischargable in Bankruptcy. The taxpayers need to be protected.