Intraday Market Thoughts

Archived IMT (2011.01.30)

by Ashraf Laidi
Jan 30, 2011 23:49

MARKETS NEEDED A CATALYST AND THEY GOT IT. It could well be argued that Egypt's political upheaval may only go so far in impacting G7 equity markets and that in the long-term, these markets will once again pick up due to their own internal demand dynamics as well as demand from emerging markets. But increasingly correlated global markets require the RIGHT TIME and RIGHT PLACE to peak and start to sell-off. Ive explained last Monday that it would be highly unlikely for the Dow-30 to end the week high, because such a development would have made it 9 consecutive weekly gain, something not seen since 1995. And thus, the failure for the Dow to gain on the week would mean 8 consecutive weekly gains, which is the first time since Mar-April, after which the May-June selloff occurred, including the May 6 Flash Crash. Then we saw the VIX posting a 20% increase on Friday, to close above both the 55 and 100-DMA in a single day, something not seen since May (also the month of that Flash Crash). MARKETS HAVE CYCLES, AND CYCLE TURNS ARE TRIGGERED BY CATALYSTS. Whether it was the April 16 SEC announcement of its Goldman Sachs investigation that called the top later that month, Ireland and Spain's debt troubles in May, or Egypt's govt collapse last week, each of these make a good story for investors to sell-off. A CHINESE RATE HIKE this week before the FEB 3rd CHINESE NEW YEAR may well be the date for the next interest rate hike, in which case would further drive up USD against all currencies, DESPITE lofty oil and gold (which remain fuelled by the Egyptian knee-jerk reaction). HERE IS TONIGHTs GAPDOWN CHART in AUDUSD and NZDJPY , calling for prelim 0.9830 and 62.40. GBPUSD still seen heading towards 1.5640 and 1.5580 after its obligatory noise around 1.5900-1.6050


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