The Week of April 20, 2014
As we draw close to the end of April we still have a lot of sideways action in the markets and a lot of pundits that don't really know what to tell their subscribers to make profits.
What I can tell you is that you have to be nimble in this sort of market and you have to abandon the extreme bearish or bullishness that you find creeping into your mind from time to time generally as a result of what you hear from the talking heads. Ignore them.
As far as the major markets are concerned we should see the EUR/USD continue its sideways to downward movements. It will collapse to the downside (not abruptly though) but the timing is not there yet. We need a bit more fear in the market place for that to happen which means more of a rush to the US Dollar. Treasury yields inched up last week which helped the dollar stabilize to the upside and generally it gave me a hint as to what is happening. I suspect we are neither going to get a huge bullish run or bearish run in the Dollar. Central banks are enjoying this lack of volatility and it should stay this way for a while which means continued patience as traders.
Gold on the other hand looks ready to make another smaller leg down. We have two inside bearish candles on the daily following the big move down the other day that I warned you about. So look for gold to move below the 1276 mark likely in the first day or two of trading this week. There are lots of stops below this area so look for an acceleration of price when you get the breach to the downside.
A couple of other currency pairs that are setting up for nice moves are the EUR/JPY and the AUD/USD. Both could be headed down from their current levels. Especially the EUR/JPY.
The USD/JPY could be headed lower from where it is now too. I suspect that the euphoria from another failed experiment from the BOJ is wearing off and the Nikkei is reflecting this. I suspect impatient Japanese investors tired of two to three decades of stagflation and deflation are once again throwing their hands up in the air. They may be right.
The lessons that the western world can take from this failed policy experimentation is that when there is too much debt (either commercially or individually) it constricts and constrains growth. It causes people to become highly cautious and this only serves to entrench even more caution. No matter how hard the government tries to convince people that everything is fine they do not buy into the process. It is like pushing on a string.
Perhaps you won't see a deflationary nightmare or hyperinflation but you won't see productive and healthy growth either.
As western world countries become even more indebted and deleveredge even more painful social unrest will prevail. This unrest should push gold higher and cause a flight of foreign money to the US shores.
Stay tuned!
What I can tell you is that you have to be nimble in this sort of market and you have to abandon the extreme bearish or bullishness that you find creeping into your mind from time to time generally as a result of what you hear from the talking heads. Ignore them.
As far as the major markets are concerned we should see the EUR/USD continue its sideways to downward movements. It will collapse to the downside (not abruptly though) but the timing is not there yet. We need a bit more fear in the market place for that to happen which means more of a rush to the US Dollar. Treasury yields inched up last week which helped the dollar stabilize to the upside and generally it gave me a hint as to what is happening. I suspect we are neither going to get a huge bullish run or bearish run in the Dollar. Central banks are enjoying this lack of volatility and it should stay this way for a while which means continued patience as traders.
Gold on the other hand looks ready to make another smaller leg down. We have two inside bearish candles on the daily following the big move down the other day that I warned you about. So look for gold to move below the 1276 mark likely in the first day or two of trading this week. There are lots of stops below this area so look for an acceleration of price when you get the breach to the downside.
A couple of other currency pairs that are setting up for nice moves are the EUR/JPY and the AUD/USD. Both could be headed down from their current levels. Especially the EUR/JPY.
The USD/JPY could be headed lower from where it is now too. I suspect that the euphoria from another failed experiment from the BOJ is wearing off and the Nikkei is reflecting this. I suspect impatient Japanese investors tired of two to three decades of stagflation and deflation are once again throwing their hands up in the air. They may be right.
The lessons that the western world can take from this failed policy experimentation is that when there is too much debt (either commercially or individually) it constricts and constrains growth. It causes people to become highly cautious and this only serves to entrench even more caution. No matter how hard the government tries to convince people that everything is fine they do not buy into the process. It is like pushing on a string.
Perhaps you won't see a deflationary nightmare or hyperinflation but you won't see productive and healthy growth either.
As western world countries become even more indebted and deleveredge even more painful social unrest will prevail. This unrest should push gold higher and cause a flight of foreign money to the US shores.
Stay tuned!
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