{"id":48261,"date":"2014-03-08T19:03:54","date_gmt":"2014-03-09T00:03:54","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=48261"},"modified":"2014-03-08T19:03:54","modified_gmt":"2014-03-09T00:03:54","slug":"weekend-update-practical-investor-12","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/08\/weekend-update-practical-investor-12\/","title":{"rendered":"Weekend Update by The Practical Investor"},"content":{"rendered":"

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Weekend Update | www.thepracticalinvestor.com<\/a><\/p>\n

March 7, 2014<\/p>\n

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— VIX broke out<\/a> above its weekly mid-Cycle resistance at 15.57and pulled back, remaining above prior lows. \u00a0This is the prelude to a probable run to the top of the chart that may occur before month-end.<\/p>\n

SPX is repelled again by Cycle Top resistance.<\/p>\n

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SPX rallied again to its weekly Cycle Top resistance at 1885.55, but was repelled on Friday before breaking through. \u00a0This may be the final point 5(b) of an Orthodox Broadening Top, often called a 5-point reversal pattern. \u00a0The SPX currently has 7 points within its Megaphone pattern, a rare anomaly. \u00a0The upper trendline of the Bearish Wedge acted as a suport this week in a second throw-over pattern. \u00a0I had previoously mentioned that, \u201cA new record high will not negate the effects of a Bearish Wedge or the Broadening Top. \u00a0It only postpones it. \u00a0Many bearish technicians are now bullish, not recognizing the bearish reversal pattern.\u201d<\/p>\n

(ZeroHedge<\/a>) \u00a05 years ago today, the S&P 500 made its post-crisis low at the oddly demonic 666 level. What many may not remember is…\u00a0the last so-called-at-the-time “secular” bull market lasts exactly 5 years and 1 day\u00a0(from October 10th 2002 to October 11th 2007)… it’s different this time though.<\/p>\n

NDX probes the tops of two bearish formations.<\/p>\n

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NDX probed its bearish Wedge and Ending Diagonal formations this week. \u00a0This indicates that the two-year, seven-month rally may be coming to an end. \u00a0A reversal occurred on Friday that portends some follow-through on Monday.<\/p>\n

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(ZeroHedge<\/a>) \u00a0The knee-jerk reaction to a better-than-expected (and entirely noise-driven) payroll number (with a rise in the unemployment rate) is a rip higher in stocks and collapse in bonds and precious metals. The USD is surging as USDJPY instantly hit 103.50 (breaking through its 50DMA) providing all the juice stocks need to test that critical Goldman 1,900 year-end target for the S&P 500. It seems, just as we warned earlier,\u00a0“whatever the number, the algos will send stocks higher – that much is given in a blow off top bubble market in which any news is an excuse to buy more.”<\/p>\n

So, whose money is propelling the markets?<\/p>\n

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The Euro completes a Diagonal formation.<\/p>\n

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The Euro challenged its weekly Cycle Top at 139.08 on Friday. \u00a0Friday was a doubly indicated Pivot day, so it appears to have completed a bearish Ending Diagonal formation. Will the Ukrainian situation worsen this weekend?<\/p>\n

(ZeroHedge<\/a>) \u00a0Perhaps it is time to finally admit that anyone who thought Putin’s Tuesday press conference, which the market so jubilantly assumed was a case of “blinking” and de-escalating tensions with the west, was wrong. If there is still any confusion, following yesterday’s news that Gazprom officially threatened Ukraine with\u00a0cutting off its gas supplies<\/a>, as well as the\u00a0storming of a Ukraine base\u00a0<\/a>by Russian troops – luckily with no shots fired so far – then today’s developments should any remaining doubts. Moments ago AP reported that as the latest, third in a row, group of OSCE inspectors tried to enter Ukraine, they were not only barred from doing so, but warnings shots were fired to emphasize the point by pro-Russian forces.<\/p>\n

EuroStoxx<\/p>\n

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The EuroStoxx 50 index reversed this week without overtaking the January 21 high. \u00a0It closed just above weekly Short-term support at 3092.69 after challenging weekly Intermediate-term support at 3068.73. \u00a0EuroStoxx leads its currency counterpart, the Euro. \u00a0It suggests that, if the EuroStoxx loses its support, then the Euro will follow.<\/p>\n

(ZeroHedge<\/a>) \u00a0About an hour ago (March 5), the head of Russia’s top natural gas producer Gazprom said on Wednesday that Ukraine had informed the company it could not pay for February gas deliveries in full, further adding to tensions between Moscow and Kiev. Alexei Miller said Ukraine’s total debt to Gazprom for gas deliveries was nearing $2 billion. “Our Ukrainian colleagues informed us that they would not be able to pay in full for February gas deliveries,” he told Russian President Vladimir Putin.<\/p>\n

As\u00a0reported by Reuters<\/a>, Miller added that Ukraine managed to redeem only $10 million on Wednesday from a total debt of $1.529 billion. He said that Ukraine’s debt would rise by $440 million on March 7, a deadline for payments. In other words, as of this moment the Ukraine already owes Russia $2 billion, or about double what John Kerry announced to much fanfare, the US would provide the country with in terms of aid.<\/p>\n

The Yen violates its supports.<\/p>\n

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The Yen fell beneath weekly Intermediate-term resistance at 97.24 in an unmistakable breakdown. \u00a0Further decline is anticipated by the Cycles Model. The next break of the Head & Shoulders neckline may bring the Yen beneath its 2008 lows.<\/p>\n

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(SeekingAlpha<\/a>) \u00a0The Yen (FXY<\/a>) carry trade was a popular vehicle for profits by the big banks in the mid-2000’s. A carry is when an investor borrows at a low interest rate in one country (Japan for instance) and then buys a strong currency or asset in another country such as the United States (VNQ<\/a>) or Europe (VGK<\/a>) that has a higher interest rate. The investor collects the interest and may even pocket currency gains.<\/p>\n

Right now the Yen Carry trade is back in full effect as the Yen falls and markets in countries with higher interest rates around the world climb.<\/p>\n

The Nikkei retraces to Intermediate-term support.\"\"<\/p>\n

The Nikkei has spent the past year decoupling its inverse relationship to the Yen. \u00a0As with any \u201cgood thing,\u201d it has been overdone and now there is a potential to have the \u201cgood effects\u201d of money printing start to unwind. \u00a0The index retraced 56.6% of its decline, but stalled last week beneath weekly Intermediate-term resistance at 15350.00 and may be in a position to resume its decline beneath the Head & Shoulders neckline\u2026<\/p>\n

(Reuters) – Japan’s Nikkei share average rose to a new five-week high on Friday morning as a weak yen lifted risk appetite following Wall Street’s gains on better-than-expected U.S. jobless claims and the European Central Bank’s decision to keep its rates unchanged.<\/p>\n

\u00a0\u00a0\u00a0The Nikkei gained 1.1 percent to 15,307.78, the highest since Jan. 29 after rising 1.6 percent on the previous day. For the week, the index has added 3.1 percent.<\/p>\n

U.S. Dollar extends its final Cycle low.<\/p>\n

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The dollar extended its Master Cycle low yet another week. \u00a0This appears to be the final low of this series of declines. \u00a0A reversal above the trendline reinstates the bullish view on the Dollar. \u00a0The dollar shorts may have to deal with the reversal in the coming weeks.<\/p>\n

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(Reuters<\/a>) – The dollar climbed on Friday, boosted by an unexpectedly large jump in U.S. jobs growth that set off enough buying to lift the greenback from a four-month low.<\/p>\n

The U.S. dollar index .DXY, a composite of six currency pairs which earlier on Friday had hit a bottom of 79.433 last seen on October 29, reversed course after the release of February’s U.S. employment data, touched a high of 79.847, and was ahead 0.07 percent for the day at 79.710 late on Friday.<\/p>\n

Treasuries reverse from the declining Trading Channel.<\/p>\n

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Treasuries reversed from the declining Trading Channel at 132.96 and now challenge the lower trendline of the Broadening Wedge at 131.50. \u00a0The Cycle turn was made from a high instead of a low. \u00a0However, we may see a surprise collapse in bonds over the next month.<\/p>\n

(ZeroHedge<\/a>) \u00a0While the comments by Russian presidential advisor, Sergei Glazyev, came before Putin’s detente press conference early this morning, they did flash a red light of warning as to what Russian response may be should the west indeed proceed with “crippling” sanctions as Kerry is demanding.\u00a0 As RIA reports, his advice is that “authorities should dump US government bonds in the event of Russian companies and individuals being targeted by sanctions over events in Ukraine.” Glazyev said the United States would be the first to suffer in the event of any sanctions regime.<\/p>\n

Gold no longer closing at the highs.\"\"<\/p>\n

Gold lengthened its retracement to 69% on Monday, but eased away from the top for the rest of the week. \u00a0The Cycles Model calls for a month-long decline that may break through the Lip of a Cup with Handle formation. \u00a0The potential consequences appear to be severe.<\/p>\n

The gold bulls are out arguing their case again.<\/p>\n

(ZeroHedge<\/a>) \u00a0Soci\u00e9t\u00e9 G\u00e9n\u00e9rale (\u201cSocGen\u201d) recently published a special report entitled \u201cThe end of the gold era\u201d that garnered far more attention than we think it deserved.\u00a0 The majority of the report focused on SocGen\u2019s \u201ccrash scenario\u201d for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375\/oz. It also included a classic criticism that we\u2019ve heard so many times before: that the gold price is in \u201cbubble territory\u201d. We have problems with both suggestions.<\/p>\n

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Crude reverses at a 66% retracement.\"\"<\/p>\n

Crude made a higher peak on Monday then proceeded to make a bearish reversal candle. \u00a0It now may be ready for a swift decline. \u00a0There is a Head & Shoulders formation at the base of this rally may be overshadowed by the Cup with Handle formation, with an even deeper target.<\/p>\n

(Bloomberg<\/a>) \u00a0A push by\u00a0Warren Buffett<\/a>\u2019s railroad to boost oil-shipment safety is meeting resistance from\u00a0Hess Corp. (HES)<\/a>\u00a0and other companies that say the plan would mean a surge in costs and force them to scrap thousands of tank cars.<\/p>\n

A series of accidents including a\u00a0Quebec<\/a>\u00a0crash that killed 47 spurred Buffett\u2019s BNSF Railway Co. along with\u00a0Union Pacific Corp. (UNP)<\/a>\u00a0to back new standards requiring older cars to be modified or junked. Shippers and railcar lessors balk at the potential cost of more than $5 billion and say carriers\u2019 operating errors are to blame for fiery derailments like BNSF\u2019s in December.<\/p>\n

China stocks consolidate above Short-term support.\"\"<\/p>\n

The Shanghai Index bounced back above Short-term support at 2054.89 in a consolidation move. \u00a0Last week\u2019s decline beneath Short-term support weakened it ability to keep the index above that level. \u00a0The secular decline may now resume with the next significant low in mid-March. \u00a0There is no support beneath its Cycle Bottom at 1943.94.<\/p>\n

(ZeroHedge<\/a>) \u00a0UPDATE: It’s happened – China has suffered its first domestic corporate bond default as Chaori fails to meet interest payments on schedule and rather more surprisingly failed to receive a last-minute mysterious or otherwise bailout…<\/p>\n