Archived IMT (2010.08.16)

BENIGN STOCKS & ACTIVE FX. I made the observation on Friday that despite directionless trading in equity indices, USD had rallied across the board as yen pulled lower following talk of a possible action from Tokyo against the yen. Were seeing the same thing today, whereby, stocks (S&P500, Dow-30) drift around neutral territory meaninglessly while the YEN (not USD) and CHF push higher against all major FX. This leads me to conclude that FX remains in risk-aversion mode without any notable losses in equities because the major indices are already in red-flag territory, with SP500 below 55, 100 and 200-day MAs. As long as S&P500 and Dow-30 continues to close below 1,100 and 10,440s this week, the -10% scenario of June-July will likely remain. ====== HAVING SAID THAT, watch out from a POSSIBLE BULLISH DAILY HAMMER in S&P500 and Dow-30, which could signal a temporary rally during a relatively empty calendar summer week. This pattern merits more scrutiny later today.