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Cliff Wachtel
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Cliff Wachtel, CPA, is currently the Director of Market Research, New Media and Training for Caesartrade.com, a fast growing forex and CFD broker. He covers a variety of topics including global market drivers, forex, currency hedged and diversified income investing, and is currently working on a... More
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  • PRIOR WEEK MARKET MOVERS: JACKSON HOLE DISTRACTS WHILE EU COLLAPSING 0 comments
    Aug 28, 2011 1:44 AM | about stocks: UUP, UDN, FXE, ERO, URR, ULE, EUO, DRR, FXA, FXB, FXC, FXD, FXF, FXEN, FXY, JYF, AUNZ, CYB, GLD, CNY, USO, DUG, USL, NBO, DBV, ICI, CEW, SLV, OIL, SPY, SDS, RSW, BXDC, SPXU, SH, DIA, EWC, EWA, TLT, XHB, ITM, IGOV, VGK, TBT, GSG, DBC, CORN, ICN, SZR, BZF, GRU, DAX-OLD, FRC, DB, SAN, BNO, ENI
     Part 1: Prior Week Market Movers & Their Lessons For the Coming Week

    The following is a weekly strategy guide for traders and investors, covering prior week’s market movers and their lessons for the coming week for traders of all major asset classes via both traditional instruments and binary options. Perfect for those seeking a summary of prior week market movers & their lessons for the coming week and beyond, & a look at likely coming week market movers.

    • Summary of overall technical and fundamental picture for risk assets
    • Speculation about more stimulus from Jackson’s Hole dominated markets
    • “Less bad” data had some influence too
    • Meanwhile, except for bond and precious metals traders, markets largely ignored a wave of scary developments as the EU continues to slide towards the edge of the abyss
    • How to protect your assets and prosper
    Technical Picture For Risk Assets

    As the below S&P 500 weekly chart shows, risk appetite made its biggest advance since late June, and nearly recovered most of last week’s losses.

    ScreenHunter 07 Aug 27 23 56  Prior Week Market Movers: Jackson Hole Distracts While EU Collapsing

    S&P 500 WEEKLY CHART COURTESY OF ANYOPTION.COM  07 aug 27 2356

    However  the technical evidence for risk assets overall remains firmly bearish:

    • The loss of the 1200 level that had served as support since November 2010 remains and for the foreseeable future this level will remain significant resistance, reinforced by both the weekly 100 and 200 day EMA. So until this level is breached, we see no prospects for a sustained rally
    • This picture of strong downward momentum gets further confirmation from the ongoing crossing of shorter term EMAs beneath longer term EMAs. For example, the 10 week EMA (blue) has crossed below the 20 week EMA (yellow) and both are threatening to cross beneath the 50 week EMA (red) in the coming weeks barring a significant rally.

    To better understand the daily movements of the prior week, we look at the below daily S&P 500 chart which shows risk appetite steadily on the rise most of the week.

    ScreenHunter 05 Aug 27 23 21  Prior Week Market Movers: Jackson Hole Distracts While EU Collapsing

    S&P 500 DAILY CHART COURTESY ANYOPTION.COM  05aug 27 2321

    Underlying Fundamental Market Drivers Last Week

    What was behind that?

    The short version: Markets moved mostly with belief about whether Bernanke would offer more stimulus (good for stocks & other risk assets, bad for the USD because stimulus is seen as a form of devaluating money printing). After that, data out of China and the EU helped, as did a technical bounce off near term support for risk assets.

    Surprisingly, a string of very disturbing developments in the EU (still THE threat to global markets) had no discernable influence on risk assets, though credit markets clearly were getting more anxious. More on these below.

    THE RALLY FROM MONDAY TO WEDNESDAY CAME FROM

    Optimism that Bernanke would indeed offer some new stimulus that would once again boost asset prices as it did a year ago.

    Given that risk assets were still close to near term technical support areas, data out of China and the EU was not great but was of the “not as bad as expected” variety, which can be good enough near support areas when markets want to bounce. That drive to bounce led markets to ignore plenty of bad data( like German ZEW, US new home sales, & CAD core retail all down, Moody’s downgrade of Japan’s credit rating from Aa2 to Aa3 on further government debt buildup), and a stream of very worrisome developments in the EU. More on these developments below.

    THURSDAY’S SELLOFF DUE TO

    Fading optimism that Bernanke would offer hope for new stimulus on Friday. Some attributed this to an article by cnbc.com’s Steve Liesman (known to have excellent Fed contacts) that asserted no new action was coming.

    Falling European markets, unsettled by a mini-flash crash in Germany that may have started on false rumors of ratings downgrades, an extension of short selling bans,  Greece activating emergency liquidity measures, and the BoE opening a line of swaps to the ECB. Most disturbing was an interview  in The Telegraph with German President Christian Wulff that cast further doubt on whether Germany would or even could continue to serve as primary bailout paymaster. Few believe the EU and Euro will survive in their present state without continued German support. More on that below

    A worse than expected reading of US first time weekly jobless claims didn’t help, serving as a reminder of US economic weakness.

    FRIDAY’S SELLOFF, REVERSAL AND REBOUND FOLLOWED QE 3 SENTIMENT

    After a week of markets moving mostly with sentiment about what Bernanke would say, markets continued that pattern Friday. The actual speech didn’t promise any new stimulus, and noted that the Fed’s tools to stimulate long term growth were limited, and that more was needed from Washington and that prompted a selloff. However, Bernanke left the door open for stimulus by announcing that the September Fed policy meeting had been expanded from one to two days, within an hour of his speech markets reversed to close higher, as markets saw hope that stimulus would then be announced. An article that morning in the Wall Street Journal  by Jon Hilsenrath, considered by some to be Bernanke’s chosen mouthpiece for telegraphing hints of his true intentions, suggested the September 21st Fed meeting would indeed bring new stimulus.

    Both stocks and gold moved higher, reflecting the belief that more stimulus is on its way. Gold closed the week back over $1800/oz, recouping about half of its losses, and reflecting its continued strength as both the EUR and USD risk being battered by new money printing as the ECB and Fed prop up their struggling economies.

    Worrisome EU Developments Ignored By Stocks, Other Risk Assets

    While stocks and forex may have ignored these developments, ongoing fear was well reflected in EU sovereign and bank bond yields and EU banking stock prices (at least when trading or shorting wasn’t suspended). There was plenty to be worried about. Highlights include.


    TO VIEW THE REST OF THIS ARTICLE PLEASE VISIT http://globalmarkets.anyoption.com AND FIND ARTICLE BY SAME NAME UNDER THE WEEKLY TAB



    DISCLOSURE /DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY, RESPONSIBILITY FOR ALL TRADING DECISIONS LIES SOLELY WITH THE READER. IF WE REALLY KNEW WHAT WOULD HAPPEN, WE WOULDN’T BE TELLING YOU FOR FREE, NOW WOULD WE? 



















     

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