Increasing Risk Aversion Causes Nasdaq Selloff And Yen Carry Trade Top Off
Tuesday, 20. May 2008, 06:48:33
Introduction
Risk aversion increased today as the financial sector, XLF, fell 1%, and this caused a sell off in the Nasdaq shares, QQQQ, and the Nasdaq, 100, QTEC, as liquidity that had come via the Fed's TAF, TSLF, and PDCF facilities pulled out.
The risk aversion caused a shooting star explosion topping-off of two groups: First, the interest rate differential darling ETFs and stocks -- the yen carry trade favored investments, such as the BRICs, South and Latin America. And secondly, the utilities, transports and industrials.
The red hot Nasdaq having turned lower today, will continue to do so; the emerging nations, utilities transports and industrials will follow later this week.
Lawmakers reached agreement on housing bill late in the today, so there could be a reversal in sentinment tomorrow; yet, I believe the financial sector is so toxic due to bank insolvency, and Level 3 laden that investment bankers, that it will continue to fall tomorrow, with the stock market continuing to sell off.
Risk Today Came From Fannie Mae, And The Surety Organizations Turning Down
Risk aversion increased today as Fannie Man, FNM, fell 3%, as did many of the mortgage backed securities insuers, such as Radian Group, RDN, Ambac, ABK which each fell 3%. Fannie's failure to rally past 30 today and fall to 28.95 will be impetus for the extinguishment of stock and bond wealth globally.
Given that earnings season ended last week, and the news of Federal Reserve facilities has been worked through the market, and all future facilities and actions priced in, the result will be that the government mortgage GSEs, Fannie Mae, FNM, and Freddie Mac, FRE, and the mortgage backed security, MBS, guarantors, are going to lead the financial sector and the whole stock market down.
Homebuilders, ITB, fell 3%; its chart shows eight weeks of rising price on falling volume; and today it fell; there is going to be a waterfall loss of value here now.
European stocks such as Germany, EWG, and Italy, EWI, turned sympathetically lower with Fannie Mae, FNM, today.
The Russell 2000, IWM, which is comprised of small US companies highly dependent upon a functional credit and investment banking system, manifested a doji at 73.97 which is at the middle of a 'broadenting top pattern' going back to October 2006. The chart shows the utter collapse of these companies with the early October Citigroup CDO Bust, and then the dramatic rally to the December 11 announcement of the lowering of the central bank lending rate by the Federal Reserve, and the 'goose up' by the Fed's provision of TAF, TSLF and PDCF. Now with the financial sector falling, the Russell 2000 shares are going to be 'goosed down'.
Here is the daily chart of the Russell 2000 showing the Fed rally to today's close.
The retail sector, XRT, has been the stellar performer of the TAF and Yen Carry Trade rally: it had sold off the most of any sector, and has made the most recovery; its bearish harami today, suggests a fall lower.
Bed Bath And Beyond, BBBY, had recovered all the way back to its former October level; but today manifested a dark cloud cover over its ascending wedge rise and fell 3%; and it is going to fall fast and hard as it is both a retail sector component as well as a consumer discretionary sector component.
Petsmart, PETM, is a great short selling candidate.
Increased Risk Aversion Caused A Nasdaq And South Korea Selloff
The Nasdaq, QQQQ, and the Nasdaq, 100, QTEC, have been red hot with liquidity coming via the Fed's TAF, TSLF, and PDCF facilities, and today it sold off; with high-tech South Korea, EWY, selling off in sympathy.
Charts of the Nasdaq, QQQQ, and the Nasdaq 100, QTEC, show a bearish harami in the middle of a 'broadening top pattern' going back to July 2007: having made full retracement to this level, they have hit serious resistance and are now falling lower.
The Nasdaq leaders fell hard as can be seen in the following charts.
Apple, AAPL; daily chart of Apple, AAPL, shows how terrifically it was helped both by a TAF rally and a Yen Carry Trade rally.
Trading in Intel, INTC, always gets vibrant at the beginning or end of a 'trading season'; and its recent rally is no exception as it went parabolic up; and today closed off manifesting a bearish harami, after yesterday's dragonfly candlestick; it has now provided three evidences of a turn lower; when semiconductors fall, as can be seen in this weekly chart of Intel, they fall rapidly, greatly rewarding those who are short.
The weekly chart of Intel, INTC, shows how greatly semiconductors were helped by 'financialization' having risen from roughly 18.50 in October 2006 to 27.50 in November 2007.
Semiconductors, XSD, has retraced to its November 2007 level and now has manifested a bearish harami candlestick.
Marvell, MRVL, is an excellent choice in a semiconductor to sell given today's bearish harami.
The glory days of profitable returns from investing in the Nasdaq are now over as can be seen in today's trading of the following stocks.
Fastneal, FAST, fell 4% today: look at its recent terrific rising price on falling volume; this stock is really going to fall fast. This company provides general building and construction supplies, I am totally surprised that it didn't trade like Lowes, LOW, or Home Depot, HD.
Foster Wheeler, FWLT, fell 4% from a near all time high.
Sandisk, SNKD, fell 7%.
The chart of NII Holding, NII, defines ascending wedge pattern.
Broadcom, BRCM, shows a bearish harami.
The chart of On Semiconductor, ONON, defines the short selling opportunity of a lifetime.
The bearish harami in Research in Motion, RIMM, says "sell me".
The spectacular rise of First Solar, FSLR, is definitely over; it's now safe to short sell this one given the chart pattern and todays 5% fall.
Navistar, NAVZ, is an excellent short selling candidate. I never, ever, expected it to get this high; iook how it the TAF-Yen-Carry-Trade-Rally took this stock righ up through its broadening top pattern. Yes, the TAF dollars has temporarily saved the insolvent banks, but the rally sent risk aversion scurring, and this stock soaring. Financialization has come through once again, this time at the end of the age of fiat wealth to value a company far in excess of its real worth, as the country sharply enters into stagflation and recession.
The lollipop hanging man candlestick in Logitech, LOGI, says, sell immediately.
Joy Global, JOYG, has been a steady performer, but the fact it is a NASDAQ participant fortells its coming slow death.
Shooting Star Type Of Candlesticks Were Common In The Yen Carry Trade Favored Investments
The EUR/JPY, FXE:FXY, fell a tiny amount today reflecting the aforementioned risk avoidance, nevertheless, the Yen Carry Trade investments rose in a shooting star finale way suggesting that the Yen Carry Trade is now going to unwind.
The BRICS, EEB, Brazil, EWZ and Latin America, ILF, rose as did world stocks, VEU. These charts define 'the end of the age of fiat wealth'. Increasing risk aversion and stagflation have turned off the two great spigots of fiat wealth -- the first being Federal Reserve lowering of interest rates and provision of TAF, PDCF, and TSLF facilities, and the second being the Yen Carry Trade provided by the bank of Japan, BOJ, lending at awesomely low rates. Look for stock and bond values to deflate rapidly in price, with liquidity flowing into commodities; yes agricultural prices and gold, $GOLD, and oil, $WTIC; are going higher soon; wealth is to be garnered and accumulated by investing in gold. The bearish harami in the chart of EFA documents the end of the age of fiat wealth. Look at how EFA was goosed up by the recent eight week long Fed-And-Yen-Carry-Trade-Rally: having risen in an ascending wedge on falling volume, the world stocks are going to fall in value.
The BRICS daily chart, EEB Daily shows how brokerages, and hedge funds, used low cost lines of credit from the Bank of Japan, BOJ, immediately as the Federal Reserve announced TAF, TSLF, and PDCF facilities, and plowed funds into their yen carry trade favorite investment with the result that EEB totally recovered its losses and closed at an all time high of 57.07.
Dry Ships, DRYS, manifested a bearish engulfing candlestick and fell sharply.
Basic materials, IYM, like the former glory of the HUI Indexed precious metal mining stocks, GDX, has been one of the investment success stories of all time; today it manifested a bearish harami.
Water resource stocks, FIW, have been bought up in unison with the BRICS.
Sohu.com, SOHU, manifested a bearish harami; if there is one Chinese stock I would sell, this is it, as its chart shows fantastic rising price on falling volume; it really got bid-up by the Yen Carry Traders.
With risk aversion increasing, look for an unwinding of the yen carry trade which will be seen in the EUR/JPY, FXE:FXY, falling from 1.630.
Although not Yen Carry Trade favored, there was a finale blast in the utilities, UTH, transports, IYT, and industrials, XLI.
How much higher the energy service shares, OIH, will rise is anybody's guess.
The chart of oil service providers to oil OIH:USO daily shows that by traditional trading they are now "priced right in line with oil". Their glory days are gone; but they should at least now perform to some degree with oil; and as oil rises higher; they should maintain a large part of their value for a while.
Occidental Petroleum, OXY, has been the very best oil company stock one could have owned.
The daily chart of basic materials, IYM, relative to commodities, RJI, IYM:RJI suggests that basic materials have scored all they can from underlying commodity prices, and are now going to fall lower, until commodity prices rise again; the weekly chart of IYM:RJI confirms this to be the case as well.
Take for example Peru Copper, PCU; it has hit resistance at 112 and today turned lower manifesting a lollipop: it "wants" ... it "needs" ... it "seeks" to fall lower.
Peru Copper has maxed out all it can on the price of copper as is seen in PCU:$COPPER.
While the world wide demand for fertilizer is insatiable, Potash, POT, has topped out as can be seen by going parabolic on falling volume, and by today's bearish engulfing candletick.
Aluminum Corp of China, ACH, is one of those yen carry trade investments that manifested a 'popping top' as evidenced by its gravestone doji. Alumina, AWC, showed a gravestone too; as did Taiwan, EWT, as well: its chart shows the most massive 'broadening top pattern' I have ever seen; it has soared lately due to better relations with mainland China; look for a 'regional asia trading combine' to coalese soon between China, Taiwan, Japan and other southeast Asia countries. Taiwan Semiconductor, TSM, should be on every bear's short selling list.
If I owned basic material stocks or a mutual fund, I would sell out and buy gold.
The REIT investors, RWR, came back for the dividends: they brought this real estate sector back debt back up to the November 2007 level; next to retail this sector has been the best recoverer; it's chart shows terrifically frail volume; it's going to fall hard.
The Federal Reserve has done all they can do to backstop the stock market: the chart of the overall stock market, VTI, to the financial sector, IYF, VTI:IFY shows that the stock market has expanded all it can on the capital provisioning marketplace; and VTI to XLF, VTI:XLF says much the same thing.
The midcaps, MDY, are the canary in the stock market coal mine: when they get excited as they did last week and today, they serve warning it's best to exit the stock market immediately. Look at the drama that Midcaps manifested at July's and October's turns lower: it did so again today: all I can say is "lookoup below".
US Government Bonds
The bond market place has declared an interest rate hike independent of Federal Reserve action: the interest on the 30 Year US Treasury Bonds, $TYX, has been rising since the Federal Reserve anounced that it would backstop the JP Morgan buyout of Bear Stearns and increase TAF facilities as needed: today, $TYX, closed at its 200 day moving average perched to rise higher and destroy the wealth of bond holders.
Don't be fooled thinking that Treasuries are going to be a lifeboat of safety; the chart of the 30 Year Government, $USB, shows that a run on the US Treasuries is underway; and be advised that they traditionally fall sharply lower, from now through July. Look at the tremendous island reversal and dark cloud in $USB back in late January: it gave clear, cogent and convincing evidence of an investment sea change in bonds: bonds no longer can preserve wealth.
Volatility
Volatility, $VIX, closed up at 17.01 standing ready to help short sellers -- the days of it calling out calm and confidence are over.
Volatility has retraced to the level of early October, immediately before the Citigroup, C, CDO Bust that started the current bear market.
Commodities
The Rogers Commodity ETN, RJI, serves as proxy for the CRB, $CRB: it shows a turn lower for now.
Commodities daily, RJI, has been awesomely strong; but is now hitting strong, that is very strong resistance.
I believe it is in an Elliot Wave 4 Down, and still has more to go, with an Elliott Wave 5 completion higher. I see a mid Elliott Wave 3 break at 11.50; when Elliott Waves are as strong as this one, this type of mid-break is common.
The Investment Application Is That One Could Short Sell The Market Or One Could Invest In Gold.
One could sell this market short: Here is one database listing stocks to sell,
And here is yet even another database of other short sell opportunities
Off all the short selling opportunities that exist today, I most definitely recommend the semiconductors, as these are going to move very quickly, greatly rewarding those who are short.
And I present these 200% ETFs for short selling and these 100% ETFs for short selling as well.
Yet rather than short sell, I recommend that one dollar cost average buy gold, $GOLD, at Bullion Vault.com over the next four weeks as I believe that a financial emergency is coming from any number of reasons, and one may not have access to his monies in a short selling account.
The chart of gold relative to stocks, GLD:VTI, closed today at 0.629.
Should gold fall in price, it could fall to 0.580. As we go forward, an investment demand for gold will become more and more defined as investors trade out of the fiat assets of stocks and bonds.
Summary
An investment sea change occured today with the ending of the eight week long Fed-And-Yen-Carry-Trade-Rally: increasing risk aversion and stagflation have turned off the two great spigots of fiat wealth -- the first being Federal Reserve lowering of interest rates and provision of TAF, PDCF, and TSLF facilities, and the second being the Yen Carry Trade provided by the bank of Japan, BOJ, lending at 0.5% interest. Look for stock and bond values to deflate rapidly in price, with liquidity flowing into commodities; yes agricultural prices, and gold, $GOLD, and oil, $WTIC; are going higher soon; wealth is to be garnered and accumulated by investing in gold. It is entirely possible that all currencies will tumble in a death spiral lower together; the EUR/JPY will continually decrease from 1.630 documenting an unwinding of the Yen Carry Trade. Look for regional trading alliances, and new regional currencies to emerge. As economic and stock, bond and credit markets deteriorate, an emergency will arise where the provisions of the Security and Prosperity Partnership of North America, the SPP, will be enforced. The North American Competitiveness Council, the NACC, with the three leaders of the continent will appoint stakeholders to oversee, direct, marshall and manage the natural resources, as well as the investment, finance, commerce and trade infrasture for strategic continental needs. USNORTHCOM will serve at the leaders direction to maintain public order and safety.
Chart Gallery
Please visit my chart gallery: it serves to historically document stock and ETFs on the cusp of falling lower; this album serves as a 'tombstone view of the end of the age of fiat wealth'.
Risk aversion increased today as the financial sector, XLF, fell 1%, and this caused a sell off in the Nasdaq shares, QQQQ, and the Nasdaq, 100, QTEC, as liquidity that had come via the Fed's TAF, TSLF, and PDCF facilities pulled out.
The risk aversion caused a shooting star explosion topping-off of two groups: First, the interest rate differential darling ETFs and stocks -- the yen carry trade favored investments, such as the BRICs, South and Latin America. And secondly, the utilities, transports and industrials.
The red hot Nasdaq having turned lower today, will continue to do so; the emerging nations, utilities transports and industrials will follow later this week.
Lawmakers reached agreement on housing bill late in the today, so there could be a reversal in sentinment tomorrow; yet, I believe the financial sector is so toxic due to bank insolvency, and Level 3 laden that investment bankers, that it will continue to fall tomorrow, with the stock market continuing to sell off.
Risk Today Came From Fannie Mae, And The Surety Organizations Turning Down
Risk aversion increased today as Fannie Man, FNM, fell 3%, as did many of the mortgage backed securities insuers, such as Radian Group, RDN, Ambac, ABK which each fell 3%. Fannie's failure to rally past 30 today and fall to 28.95 will be impetus for the extinguishment of stock and bond wealth globally.
Given that earnings season ended last week, and the news of Federal Reserve facilities has been worked through the market, and all future facilities and actions priced in, the result will be that the government mortgage GSEs, Fannie Mae, FNM, and Freddie Mac, FRE, and the mortgage backed security, MBS, guarantors, are going to lead the financial sector and the whole stock market down.
Homebuilders, ITB, fell 3%; its chart shows eight weeks of rising price on falling volume; and today it fell; there is going to be a waterfall loss of value here now.
European stocks such as Germany, EWG, and Italy, EWI, turned sympathetically lower with Fannie Mae, FNM, today.
The Russell 2000, IWM, which is comprised of small US companies highly dependent upon a functional credit and investment banking system, manifested a doji at 73.97 which is at the middle of a 'broadenting top pattern' going back to October 2006. The chart shows the utter collapse of these companies with the early October Citigroup CDO Bust, and then the dramatic rally to the December 11 announcement of the lowering of the central bank lending rate by the Federal Reserve, and the 'goose up' by the Fed's provision of TAF, TSLF and PDCF. Now with the financial sector falling, the Russell 2000 shares are going to be 'goosed down'.
Here is the daily chart of the Russell 2000 showing the Fed rally to today's close.
The retail sector, XRT, has been the stellar performer of the TAF and Yen Carry Trade rally: it had sold off the most of any sector, and has made the most recovery; its bearish harami today, suggests a fall lower.
Bed Bath And Beyond, BBBY, had recovered all the way back to its former October level; but today manifested a dark cloud cover over its ascending wedge rise and fell 3%; and it is going to fall fast and hard as it is both a retail sector component as well as a consumer discretionary sector component.
Petsmart, PETM, is a great short selling candidate.
Increased Risk Aversion Caused A Nasdaq And South Korea Selloff
The Nasdaq, QQQQ, and the Nasdaq, 100, QTEC, have been red hot with liquidity coming via the Fed's TAF, TSLF, and PDCF facilities, and today it sold off; with high-tech South Korea, EWY, selling off in sympathy.
Charts of the Nasdaq, QQQQ, and the Nasdaq 100, QTEC, show a bearish harami in the middle of a 'broadening top pattern' going back to July 2007: having made full retracement to this level, they have hit serious resistance and are now falling lower.
The Nasdaq leaders fell hard as can be seen in the following charts.
Apple, AAPL; daily chart of Apple, AAPL, shows how terrifically it was helped both by a TAF rally and a Yen Carry Trade rally.
Trading in Intel, INTC, always gets vibrant at the beginning or end of a 'trading season'; and its recent rally is no exception as it went parabolic up; and today closed off manifesting a bearish harami, after yesterday's dragonfly candlestick; it has now provided three evidences of a turn lower; when semiconductors fall, as can be seen in this weekly chart of Intel, they fall rapidly, greatly rewarding those who are short.
The weekly chart of Intel, INTC, shows how greatly semiconductors were helped by 'financialization' having risen from roughly 18.50 in October 2006 to 27.50 in November 2007.
Semiconductors, XSD, has retraced to its November 2007 level and now has manifested a bearish harami candlestick.
Marvell, MRVL, is an excellent choice in a semiconductor to sell given today's bearish harami.
The glory days of profitable returns from investing in the Nasdaq are now over as can be seen in today's trading of the following stocks.
Fastneal, FAST, fell 4% today: look at its recent terrific rising price on falling volume; this stock is really going to fall fast. This company provides general building and construction supplies, I am totally surprised that it didn't trade like Lowes, LOW, or Home Depot, HD.
Foster Wheeler, FWLT, fell 4% from a near all time high.
Sandisk, SNKD, fell 7%.
The chart of NII Holding, NII, defines ascending wedge pattern.
Broadcom, BRCM, shows a bearish harami.
The chart of On Semiconductor, ONON, defines the short selling opportunity of a lifetime.
The bearish harami in Research in Motion, RIMM, says "sell me".
The spectacular rise of First Solar, FSLR, is definitely over; it's now safe to short sell this one given the chart pattern and todays 5% fall.
Navistar, NAVZ, is an excellent short selling candidate. I never, ever, expected it to get this high; iook how it the TAF-Yen-Carry-Trade-Rally took this stock righ up through its broadening top pattern. Yes, the TAF dollars has temporarily saved the insolvent banks, but the rally sent risk aversion scurring, and this stock soaring. Financialization has come through once again, this time at the end of the age of fiat wealth to value a company far in excess of its real worth, as the country sharply enters into stagflation and recession.
The lollipop hanging man candlestick in Logitech, LOGI, says, sell immediately.
Joy Global, JOYG, has been a steady performer, but the fact it is a NASDAQ participant fortells its coming slow death.
Shooting Star Type Of Candlesticks Were Common In The Yen Carry Trade Favored Investments
The EUR/JPY, FXE:FXY, fell a tiny amount today reflecting the aforementioned risk avoidance, nevertheless, the Yen Carry Trade investments rose in a shooting star finale way suggesting that the Yen Carry Trade is now going to unwind.
The BRICS, EEB, Brazil, EWZ and Latin America, ILF, rose as did world stocks, VEU. These charts define 'the end of the age of fiat wealth'. Increasing risk aversion and stagflation have turned off the two great spigots of fiat wealth -- the first being Federal Reserve lowering of interest rates and provision of TAF, PDCF, and TSLF facilities, and the second being the Yen Carry Trade provided by the bank of Japan, BOJ, lending at awesomely low rates. Look for stock and bond values to deflate rapidly in price, with liquidity flowing into commodities; yes agricultural prices and gold, $GOLD, and oil, $WTIC; are going higher soon; wealth is to be garnered and accumulated by investing in gold. The bearish harami in the chart of EFA documents the end of the age of fiat wealth. Look at how EFA was goosed up by the recent eight week long Fed-And-Yen-Carry-Trade-Rally: having risen in an ascending wedge on falling volume, the world stocks are going to fall in value.
The BRICS daily chart, EEB Daily shows how brokerages, and hedge funds, used low cost lines of credit from the Bank of Japan, BOJ, immediately as the Federal Reserve announced TAF, TSLF, and PDCF facilities, and plowed funds into their yen carry trade favorite investment with the result that EEB totally recovered its losses and closed at an all time high of 57.07.
Dry Ships, DRYS, manifested a bearish engulfing candlestick and fell sharply.
Basic materials, IYM, like the former glory of the HUI Indexed precious metal mining stocks, GDX, has been one of the investment success stories of all time; today it manifested a bearish harami.
Water resource stocks, FIW, have been bought up in unison with the BRICS.
Sohu.com, SOHU, manifested a bearish harami; if there is one Chinese stock I would sell, this is it, as its chart shows fantastic rising price on falling volume; it really got bid-up by the Yen Carry Traders.
With risk aversion increasing, look for an unwinding of the yen carry trade which will be seen in the EUR/JPY, FXE:FXY, falling from 1.630.
Although not Yen Carry Trade favored, there was a finale blast in the utilities, UTH, transports, IYT, and industrials, XLI.
How much higher the energy service shares, OIH, will rise is anybody's guess.
The chart of oil service providers to oil OIH:USO daily shows that by traditional trading they are now "priced right in line with oil". Their glory days are gone; but they should at least now perform to some degree with oil; and as oil rises higher; they should maintain a large part of their value for a while.
Occidental Petroleum, OXY, has been the very best oil company stock one could have owned.
The daily chart of basic materials, IYM, relative to commodities, RJI, IYM:RJI suggests that basic materials have scored all they can from underlying commodity prices, and are now going to fall lower, until commodity prices rise again; the weekly chart of IYM:RJI confirms this to be the case as well.
Take for example Peru Copper, PCU; it has hit resistance at 112 and today turned lower manifesting a lollipop: it "wants" ... it "needs" ... it "seeks" to fall lower.
Peru Copper has maxed out all it can on the price of copper as is seen in PCU:$COPPER.
While the world wide demand for fertilizer is insatiable, Potash, POT, has topped out as can be seen by going parabolic on falling volume, and by today's bearish engulfing candletick.
Aluminum Corp of China, ACH, is one of those yen carry trade investments that manifested a 'popping top' as evidenced by its gravestone doji. Alumina, AWC, showed a gravestone too; as did Taiwan, EWT, as well: its chart shows the most massive 'broadening top pattern' I have ever seen; it has soared lately due to better relations with mainland China; look for a 'regional asia trading combine' to coalese soon between China, Taiwan, Japan and other southeast Asia countries. Taiwan Semiconductor, TSM, should be on every bear's short selling list.
If I owned basic material stocks or a mutual fund, I would sell out and buy gold.
The REIT investors, RWR, came back for the dividends: they brought this real estate sector back debt back up to the November 2007 level; next to retail this sector has been the best recoverer; it's chart shows terrifically frail volume; it's going to fall hard.
The Federal Reserve has done all they can do to backstop the stock market: the chart of the overall stock market, VTI, to the financial sector, IYF, VTI:IFY shows that the stock market has expanded all it can on the capital provisioning marketplace; and VTI to XLF, VTI:XLF says much the same thing.
The midcaps, MDY, are the canary in the stock market coal mine: when they get excited as they did last week and today, they serve warning it's best to exit the stock market immediately. Look at the drama that Midcaps manifested at July's and October's turns lower: it did so again today: all I can say is "lookoup below".
US Government Bonds
The bond market place has declared an interest rate hike independent of Federal Reserve action: the interest on the 30 Year US Treasury Bonds, $TYX, has been rising since the Federal Reserve anounced that it would backstop the JP Morgan buyout of Bear Stearns and increase TAF facilities as needed: today, $TYX, closed at its 200 day moving average perched to rise higher and destroy the wealth of bond holders.
Don't be fooled thinking that Treasuries are going to be a lifeboat of safety; the chart of the 30 Year Government, $USB, shows that a run on the US Treasuries is underway; and be advised that they traditionally fall sharply lower, from now through July. Look at the tremendous island reversal and dark cloud in $USB back in late January: it gave clear, cogent and convincing evidence of an investment sea change in bonds: bonds no longer can preserve wealth.
Volatility
Volatility, $VIX, closed up at 17.01 standing ready to help short sellers -- the days of it calling out calm and confidence are over.
Volatility has retraced to the level of early October, immediately before the Citigroup, C, CDO Bust that started the current bear market.
Commodities
The Rogers Commodity ETN, RJI, serves as proxy for the CRB, $CRB: it shows a turn lower for now.
Commodities daily, RJI, has been awesomely strong; but is now hitting strong, that is very strong resistance.
I believe it is in an Elliot Wave 4 Down, and still has more to go, with an Elliott Wave 5 completion higher. I see a mid Elliott Wave 3 break at 11.50; when Elliott Waves are as strong as this one, this type of mid-break is common.
The Investment Application Is That One Could Short Sell The Market Or One Could Invest In Gold.
One could sell this market short: Here is one database listing stocks to sell,
And here is yet even another database of other short sell opportunities
Off all the short selling opportunities that exist today, I most definitely recommend the semiconductors, as these are going to move very quickly, greatly rewarding those who are short.
And I present these 200% ETFs for short selling and these 100% ETFs for short selling as well.
Yet rather than short sell, I recommend that one dollar cost average buy gold, $GOLD, at Bullion Vault.com over the next four weeks as I believe that a financial emergency is coming from any number of reasons, and one may not have access to his monies in a short selling account.
The chart of gold relative to stocks, GLD:VTI, closed today at 0.629.
Should gold fall in price, it could fall to 0.580. As we go forward, an investment demand for gold will become more and more defined as investors trade out of the fiat assets of stocks and bonds.
Summary
An investment sea change occured today with the ending of the eight week long Fed-And-Yen-Carry-Trade-Rally: increasing risk aversion and stagflation have turned off the two great spigots of fiat wealth -- the first being Federal Reserve lowering of interest rates and provision of TAF, PDCF, and TSLF facilities, and the second being the Yen Carry Trade provided by the bank of Japan, BOJ, lending at 0.5% interest. Look for stock and bond values to deflate rapidly in price, with liquidity flowing into commodities; yes agricultural prices, and gold, $GOLD, and oil, $WTIC; are going higher soon; wealth is to be garnered and accumulated by investing in gold. It is entirely possible that all currencies will tumble in a death spiral lower together; the EUR/JPY will continually decrease from 1.630 documenting an unwinding of the Yen Carry Trade. Look for regional trading alliances, and new regional currencies to emerge. As economic and stock, bond and credit markets deteriorate, an emergency will arise where the provisions of the Security and Prosperity Partnership of North America, the SPP, will be enforced. The North American Competitiveness Council, the NACC, with the three leaders of the continent will appoint stakeholders to oversee, direct, marshall and manage the natural resources, as well as the investment, finance, commerce and trade infrasture for strategic continental needs. USNORTHCOM will serve at the leaders direction to maintain public order and safety.
Chart Gallery
Please visit my chart gallery: it serves to historically document stock and ETFs on the cusp of falling lower; this album serves as a 'tombstone view of the end of the age of fiat wealth'.
WIDGETIZE