Archived IMT (2011.03.15)

Markets gradually positioning to what could be a Japanese market meltdown after a 4th nuclear reactor blew up. Japans Nikkei-225 ended down 10% (considered a crash) after a having been -14% at some point earlier today. SP500 futures -30 pts at 1260 (further below the 55-day MA) and US Dow-30 futures -238 pts. The classic case of risk aversion is prompting renewed yen strength alongside the USD. AUDUSD breaks below its 200-day MA of 0.9960, eyeing prelim target of 0.99, while EURUSD seen supported at the trendline support of $1.3820 since Jan 10. The USD rally called last week is underway, but it is unlikely for EURUSD to close below this level in the event as long as the FOMC does not show any dissenters with QE2. Interestingly, todays FOMC meeting was expected to show the early signs of a departure away from QE2 via the possible hawkish dissenters, but the Committee may hold off from dissenting in light what is happening in Japan. Gold and silver are near their recent highs on safehaven fears while oil is down 2%. As US indices are now flat for the year, we expect at least another 2.5% decline in S&P500 and Dow-30 from these levels.